Whitecap Resources (WCP.TO)

This has become the "go to" mid-cap name. They have very good support from a few US institutional investors. They used the downturn to acquire different assets. Has a business model that, for the next couple of years, should allow them to grow at above peer average, pay an above peer average dividend, and maintain a very strong balance sheet.

The chart shows a gentle downtrend channel from the beginning of the year, and it has made a couple of bottoms. Started to find its legs about mid year, went up, came back and tested it again. He would like to see it get above $9.75, in order to get a quick acceleration to about $12, where you are going to start to run into some resistance. This looks reasonably positive. Also, some indicators are starting to turn up. You have some nice tailwinds.

Her view on energy is that it will continue to do well until the Saudi Aramco deal gets done. After that, all bets are off. She is quite happy to own oil stocks until then. This company has a really nice dividend. She has owned this as a defensive name.

He likes this one. It is not in his top 5 but the management team has done a good job. They have good production growth. He would buy at these prices.

(Top Pick Apr 15/16, Up 4.31%) He decided to take a trade on this one in the spring for seasonality reasons. There is no money flow into oil stocks. You are not seeing any new energy ETFs coming out because nobody cares. He only has 3 energy stocks left.

WCP vs. FRU-T. He prefers Freehold. It is a safer way to play energy in these times. They put a great quarter out last night, raised their dividend. If oil went to $55-$60 you would make more money in WCP-T. FRU-T has a low payout ratio.

A good oil company. They’ve held up better than others. He would prefer Torque (?) or Spartan (SPE-T) based on valuations. The company just gave an update and are temporarily down in the low $40s, so he wouldn’t be looking for a dividend cut. At $50 oil, total return is probably 13 or 14. His preference would still be to go into some of the Permian guys.

This is one he has been looking at and one he would like to own. It has the 2^nd lowest breakeven point for oil in Canada. At current prices, its payout ratio is around 80%, which is pretty good. A very, very well-managed company. Dividend yield of 2.9%. This is one you can seriously look at.

(A Top Pick Feb 10/17. Down 10.99%.) Loves the management team. Saskatchewan/Alberta with light oil. This is a dividend paying model where they can grow production 7%-10% a year. Pays about a 3% dividend, but all from the confines of cash flow. They are not taking on more debt to build the company. As the price of oil goes up, they’ll either do more acquisitions or they’ll raise the dividend again. Dividend yield of around 3%.

Great assets and great management. A core holding in a dividend paying portfolio. A low-cost producer of light oil in Saskatchewan and Alberta. They aim to grow production 7%-10% per year. 2.9% dividend yield.

A very well-run company. His quarrel is that they have been paying out a dividend, and have to issue equity, diluting existing shareholders to grow the business. Hopefully, as energy prices gradually improve, which he believes they will, this will provide you with good returns. Right now, people are worried that they might buy Raging River (RRX-T). There are probably easier trades. (See Top Picks.)

It is a reasonable valuation and has reasonable book value. The problem is price momentum. The trend is lower.

An excellent quality company. They can keep increasing dividends as oil prices stabilize. They have a lot of free cash flow. We have seen some pretty significant increases in production, all internally funded. It has done nothing so it has lots of upside.

There is nothing wrong with it, but there is a buyer strike. Investors are standing back. He has US names that will grow more and at a cheaper valuation. It is difficult to make a case for owning the Canadian names.

When a sector gets crushed the overwhelming sentiment is to go back and look for the money that you feel it owes you. A lot of people jumped right back into the energy stocks in Jan-Feb. The history is, unless you get significant restructuring, it is likely there is going to be some indigestion after 12-14 months. That looks like what we are getting. He would prefer something like Algonquin Power (AQN-T) which is acting pretty well and is in a defensive group.