Whitecap Resources (WCP.TO)

At a very interesting level. It is back at the low levels of 2012 and 2013. The volume has been steady. It looks like a great place where you would want to buy this name.

(A Top Pick Feb 12/15. Down 53.5%.) Lots of free cash flow and dividend growth potential is still there in a high oil price environment, but their hedging has rolled off, which makes things a little more challenging. It also increases their debt. Too many people were hiding in this story. Thinks very highly of management. Dividend yield of 7.6%.

There is a long downtrend from April. Chart shows it has just made a higher low, but it needs to have a little more meaningful legs to it, as it has to break out of down trending and move up. There is going to be a lot of volatility in the energy sector.

He is quite concerned about small-cap companies, because they are the ones whose balance sheets are most affected. The company was going great guns, but has been backing and filling since 2014. If you are in this, don’t overweight it. Would prefer some of the intermediates like Crescent Point (CPG-T).

Surge Energy (SGY-T) or Whitecap (WCP-T)? Both are decent names, but this is the higher-quality of the 2, so is the one he would pick, but with the caveat that they are both smaller energy companies in a very brutal tape for energy.

Crescent Point (CPG-T) or Whitecap (WCP-T)? This company recently cut its dividend by about 40%, as well as their CapX. They believe they can have their dividend payout ratio under 100%. He likes this as a company that can survive.

This is one he would definitely be adding to at some point, if they cut the dividend. Good management for growth. This has upside on getting acquired. His company has a $13 target on this.

Good quality company. He wouldn’t be in a rush to buy any of these things. If you saw the price of crude go $40-$45 and it looks like we have turned the corner, he would absolutely own this.

(A Top Pick Dec 1/14. Down 14.90%.) Has still been buying recently at around $9 which he finds compelling.

Thinks this will have some pretty good leverage on the way up.

This is one commodity stock that he has added a little bit to. Likes their assets and the management team, and the valuation is good. Thinks the dividend is sustainable in the near term. Its safety depends on oil prices. There is no immediate pressure on it, but if oil prices stay at this level for the next 12-18 months, none of the dividends are going to be safe in any of these companies.

(A Top Pick Oct 17/14. Down 17.41%.) Cut the dividend late last year, but haven’t done so this year. On an unhedged basis next year of $55 oil, it is trading at over 10X cash flow, so the opportunity for them to go out and use their currency to scoop assets from some of the majors is great. Because of the valuation he no longer owns it. Good management.

Just reported a solid Q3. Slightly bumped their production guidance and the dividend looks pretty stable. Had reduced their operating costs quite nicely. Great company because of the way they can advertise these larger volumes over the existing infrastructure, and drive down the operating costs. Dividend yield of 6.6%.

In all likelihood, the dividend is sustainable over the next 12 months. A highly efficient company. Just raised their production guidance. With his assumption of $48 oil this year, $55 next year and $60 the following year, their balance sheet is just fine. Payout ratios are below 100%. Cheaper than its peers on a five-year average. The only thing is, these balance sheets are very sensitive to lower oil.

It has not been moving, but that is good news considering what has been happening in the sector. His model price is $11.33 and we had a negative transit last week. He feels it comes back to $10.21 and fools around for some time there. It is probably dead money for some time. Negative transit is when there are negative fundamentals ahead. It is one of his company’s systems of analysis. Maybe you get interested at the $10.20 area.