Vermilion Energy Inc (VET.TO)

Oil prices are volatile, and any company with debt is going to be more affected by it. He doesn’t follow this closely, but assumes they have more debt than average. His personal view is that energy prices are going to come up, because at the end of the day, everything is cyclical. Thinks Saudi Arabia will do everything they can to firm up on prices.

Management is very well regarded with high quality assets. As a result, they trade at a pretty healthy premium relative to their peers. There are other names he prefers on a valuation basis, but it is hard to knock this company.

(A Top Pick June 2/16. Up 16%.) One of the more international players. Their first wells in France have just come on. Australia is doing quite well. Faced a few small delays in the Netherlands. This is a company that you can own, not only because of great management and diversification, but it also pays fairly well to own it. Fully valued right now, but if it took a hit, he would be adding for new clients.

Not particularly cheap. Balance sheet is fine and yield is high, but cash flows are not there to support that long term. Avoid it. If energy went lower they could have to cut the dividend.

(Top Pick Feb 10/16, Up 62%) A well run, great company that did not have to cut its dividend. You may see a dividend increase in the next year or so. They have free cash flow from almost all their business segments. It should be looked at as a dividend growth company and can be bought at these levels.

An excellent oil play. But it will move with oil prices. If oil will be $50 to $60 then they will do okay. He is only interested in companies that grew oil production despite the drop in prices. They have a balance sheet that is reasonable compared to peers. They trade a bit of a premium. He is underweight oil companies.

Their competency is being able to get low cost pools of oil and natural gas globally. They are able to do very accretive acquisitions. Part of their DNA is to pay out a good portion of their cash flow as a dividend. There has been a bit of a correction, so it’s a time that you can have a look at this.

Chart shows a long downtrend from 2014 with an uptrend starting in early 2016. There is a small amount of danger that it may currently be breaking the uptrend. As long as it doesn’t have a Low and the 200-day moving average taken out, you are good to go.

Very difficult not to like this as a company. All the boxes you want are ticked off. The one box he can’t tick off is valuation. This has always carried a premium valuation. He wants names that have fallen by 20%, not those that have generally held up pretty well.

It has done very well this year. It was below $20 and went to over $60. They have done well because they get pricing in Europe for a lot of their products. Their cash flow in Q4 will probably be the strongest for the year, but if we do see oil prices back off after winter is over, then it will back off, maybe to the low $40s. Long term it is a great name for investors.

A good company. It has assets globally. Brent prices are trading at a premium. A real strong balance sheet and management team. You can probably get another 15% on the stock over the next year. Dividend yield of 4.1%.

Owns this in some income accounts. An oil stock with a lot of its assets outside of North America. They are really good at finding properties in good political markets, but just not in North America. Dividend yield of 4.5%.

This is a strange one. It is a Canadian company, but the majority of assets are in Europe and off Ireland’s coast. It’s not North America so you don’t have some of the problems there. Runs a very tight shop in Europe. They’ve managed to keep their balance sheet in good shape. With higher oil prices, that is just going to add. The dividend yield of 4.62% looks safe. (Analysts’ price target is $57.50.)

One of the energy stocks he likes. 4 years ago, they were earning a 14% ROC, but that is down now because of lower energy prices. It is only earning a zero percent on capital, however if that rebounds to a more normalized level, there is no reason you can’t continue holding this.

Has been watching this for a long time. They had this core project in Ireland, which is going to be a big part of their production coming online, so there was a fair amount of risk. They brought the project on this winter and have since grown the company, so it is smaller relative to the rest of the company. There was a selloff last year followed by another one in September, which is where he took positions at around $47.50. It has moved up significantly from there, but you are still getting a dividend yield of 4.8% with potential for dividend growth down the road. Even if oil prices drop temporarily, this company has never cut its dividend.