Baytex Energy Corp

BTE-T

(A Top Pick Oct 19/18, Down 43%) He still owns this and added yesterday. He was uber bullish oil last year as Iran was about to face export constraints (they were later waived by the US). They have interest in the Eagle Ford and one of the biggest plays in the Duvernay Shale in Canada. The new production is very economic at today's WTI price levels. They could soon see big share buybacks as cash flow improves.

He stock now is so cheap that he is not longer in the sell camp. It will service debt with a lot of cash flow if we hit $70 oil as he thinks we will.

They are rationalizing the management structure given their debt after acquiring Raging River. They are trying to get more into light oil. A recession would cause oil prices to fall and with it the stock price.

Baytex bond: 6.625% 2022 It's their bond, paying a 6.625% rate of return. They own Eaglesford, a Texas shale asset, that could cover this entire bond if BTE ever went into receivership. BTE won't and in fact is doing well. BTE stock is too volatile. The bond is good for conservative investors.

It may be slightly lower in reputation compared to his other holdings. It is very low valued and he thinks they have fixed the balance sheet. Ten years ago it traded almost $60 per share. They added leverage when oil prices were high and made a large US acquisition at the wrong time. The stock will never return to those lofty levels, it may get back to $4-$5 -- still a great return. A little bit riskier this could be a speculative buy. Yield 0%

Their balance sheet has been slipping for the last five years. It trades at 40% of book value. It has a little bit of upside potential. A war in the Middle East would help this stock significantly. Overall, we need better oil and gas pricing on a sustained level.

Had to throw an energy stock in, because they're so cheap. Paid down debt. About 60% of production gets a premium price. No dividend. (Analysts’ price target is $3.55)

(A Top Pick Aug 17/18, Down 53%) It's still a core holding, even though it's trading at a 32% free cash flow yield at $60/barrel. It's trading at a third of its historic multiple. And yet this year they're drilling their best holes and unlocked a key shale play. He's confident they'll use their free cash flow to buy back lots of shares.

For TFSA? BTE is the poster child of beaten-up Canadian oil stocks. They have a great asset in the U.S. They have both good and bad, but BTE will move with the oil price which is weak now, but will probably go higher in 20201. But BTE still carries a lot of debt. Not the ideal stock in this sector.

(A Top Pick Jul 20/18, Down 58%) It remains a core holding, but it's fallen off the radar of investors. Investors aren't buying Canadian oil. Trades at 30% free cash flow yield. He expects 2x debt-to-cash flow in the second half of 2019. By then, they should heavily buyback shares.

It's fallen off many radar screens. Their leverage will be lower in coming months. Trades at 30% free cash flow yield and positioned to buyback a lot of shares. It is clearly mispriced now. (Analysts’ price target is $3.55)

It has been a while since he held it. He prefers owning the senior producers, when it comes to heavy oil. Their projects have not been well capitalized and they have taken time to get the Duvernay assets incorporated from the Raging River acquisition. Nothing wrong with it and they are paying down debt. There are just better opportunities out there.

Canadian oil stocks are finally seeing what the market wants from them: stop production growth, pay shareholders, buy back shares and pay down debt. Hopefully this translates into higher stock prices. We've seen a massive exodus of investment from this sector. Valuations are cheap enough. (Analysts’ price target is $3.59)

It's very cheap and profitable. The balance sheet has gotten better. This should trade at $4, though he can't see it happening. The current price is a good entry, but the oil sector needs a catalyst (i.e. pipelines) for this--and other energy stocks--to really move.