Stock Opinions by Josef Schachter - Stockchase Experts
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Stock Opinions by Josef Schachter - Stockchase Experts


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COMMENT
General Market Comment 

October 9, 2018

Overview. He is taking a bearish view on oil, expecting it to drop to $60 US. He expects it to drop this quarter. since refineries close to retool for winter grades, seasonal build in this quarter andIran sanctions are overestimated and expects an exaggerated fall back. Every month OPEC has been increasing its oil production. He expects the Western Canada Select Discount to stay low for the winter. In contrast, his view has been bullish on natural gas. Gas has gone up about 20%. He recommends AGAINST buying natural gas stocks at this time because he believes tax loss selling will be brutal this year to offset large capital gains from cannabis stocks by selling their losers. 

Overview. He is taking a bearish view on oil, expecting it to drop to $60 US. He expects it to drop this quarter. since refineries close to retool for winter grades, seasonal build in this quarter andIran sanctions are overestimated and expects an exaggerated fall back. Every month OPEC has been increasing its oil production. He expects the Western Canada Select Discount to stay low for the winter. In contrast, his view has been bullish on natural gas. Gas has gone up about 20%. He recommends AGAINST buying natural gas stocks at this time because he believes tax loss selling will be brutal this year to offset large capital gains from cannabis stocks by selling their losers. 

Unknown
Josef Schachter

President, Schachter Asset Mana...

Price Price
$0.020
Owned Owned
_N/A

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COMMENT
SDX Energy Inc(SDX-X) 

October 9, 2018

Trading has been halted for a week or two because of rumours of a reverse takeover. Trading has been halted by the London Stock Exchange until SDX either does the deal or does not. He has no information about the takeover. He still likes the company because it is significantly increasing production from discoveries already made, in line with expectations it has set at conferences. All the things they’ve talked about, from an operational point of view, are happening. He thinks the stock is cheap and he assigns a $2 target to it. But valuation might change with the details of the deal.

oil/gas

Trading has been halted for a week or two because of rumours of a reverse takeover. Trading has been halted by the London Stock Exchange until SDX either does the deal or does not. He has no information about the takeover. He still likes the company because it is significantly increasing production from discoveries already made, in line with expectations it has set at conferences. All the things they’ve talked about, from an operational point of view, are happening. He thinks the stock is cheap and he assigns a $2 target to it. But valuation might change with the details of the deal.

oil/gas
Josef Schachter

President, Schachter Asset Mana...

Price Price
$0.960
Owned Owned
Yes

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COMMENT
Razor Energy Corp (RZE-T) 

October 9, 2018

Has recently gone to a dividend model. They are giving investors 16 cents for last year and 0.125 monthly rate this year, which works out to about a 5% dividend yield. They produce about 5000 boe per day. They have very low decline rates. He likes the management team. They are among the few companies that have done very well this year. There is a liquidity issue because this is a very small cap company. This is one of the names on his coverage list. Yield 5%.

Has recently gone to a dividend model. They are giving investors 16 cents for last year and 0.125 monthly rate this year, which works out to about a 5% dividend yield. They produce about 5000 boe per day. They have very low decline rates. He likes the management team. They are among the few companies that have done very well this year. There is a liquidity issue because this is a very small cap company. This is one of the names on his coverage list. Yield 5%.

0
Josef Schachter

President, Schachter Asset Mana...

Price Price
$0.000
Owned Owned
Unknown

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BUY
Blackbird Energy Inc(BBI-X) 

October 9, 2018

The caller asked him to speak to Blackbird’s recent financial report. He is a big fan of the company. It is in one of the most liquid-rich areas of the basin (Montney fairway); it has a massive land spread and is bringing on production in Q2 of 2019 with a new facility with Tidewater Midstream (TWM-T) that will increase volumes to 8000 boe per day. These are about 50% liquids, so this company’s cash flow will start booming by Q2 2019. Net asset values have gone up significantly. He has a 12-month target of $0.70 and expects the price to rise further after Q2.

Energy

The caller asked him to speak to Blackbird’s recent financial report. He is a big fan of the company. It is in one of the most liquid-rich areas of the basin (Montney fairway); it has a massive land spread and is bringing on production in Q2 of 2019 with a new facility with Tidewater Midstream (TWM-T) that will increase volumes to 8000 boe per day. These are about 50% liquids, so this company’s cash flow will start booming by Q2 2019. Net asset values have gone up significantly. He has a 12-month target of $0.70 and expects the price to rise further after Q2.

Energy
Josef Schachter

President, Schachter Asset Mana...

Price Price
$0.350
Owned Owned
Yes

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BUY
Encana Corp(ECA-T) 

October 9, 2018

This is a liquids-rich player in the Permian basin and in the Canadian Montney. They just announced sale of their San Juan assets for $400 million US dollars. Their debt at the end of Q2 was $4 billion, so this helps them knock that down significantly. The company is growing its production in its core areas, both in Canada and the US. Institutional investors like this stock a lot. They are using their land much more efficiently than is typical. Rather than drilling 8 wells per pad, they can drill at multiple levels and take oil from 50 wells per pad. The company also uses walking rigs to make all this drilling more efficient. This is a name that investors want to own for the long term.

oil/gas

This is a liquids-rich player in the Permian basin and in the Canadian Montney. They just announced sale of their San Juan assets for $400 million US dollars. Their debt at the end of Q2 was $4 billion, so this helps them knock that down significantly. The company is growing its production in its core areas, both in Canada and the US. Institutional investors like this stock a lot. They are using their land much more efficiently than is typical. Rather than drilling 8 wells per pad, they can drill at multiple levels and take oil from 50 wells per pad. The company also uses walking rigs to make all this drilling more efficient. This is a name that investors want to own for the long term.

oil/gas
Josef Schachter

President, Schachter Asset Mana...

Price Price
$16.320
Owned Owned
Unknown

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BUY

The company is very cheap in terms of price to book. Their book value was $4 at the end of June. However, they have a debt problem: $211 million of debt compared to an equity value of $369 million. He sees this as a takeover candidate especially now because he is seeing consolidation in the rig industry. When the industry turns around, this company will be very profitable. Utilizations rates go from 20% to 70% or 80% and much of the increased cash is profit. In addition, when rigs are busy, rig suppliers have pricing power. So, there can be an increase of 10x in profitability.

The company is very cheap in terms of price to book. Their book value was $4 at the end of June. However, they have a debt problem: $211 million of debt compared to an equity value of $369 million. He sees this as a takeover candidate especially now because he is seeing consolidation in the rig industry. When the industry turns around, this company will be very profitable. Utilizations rates go from 20% to 70% or 80% and much of the increased cash is profit. In addition, when rigs are busy, rig suppliers have pricing power. So, there can be an increase of 10x in profitability.

0
Josef Schachter

President, Schachter Asset Mana...

Price Price
$0.830
Owned Owned
Yes

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BUY
Surge Energy Inc(SGY-T) 

October 9, 2018

Schachter has liked this company for a long time. The company is in the midst of an acquisition ($320 million) that will add significantly to its production. The dividend will increase if the acquisition goes through. He has a $3.70 12-month target and an $8.70 target for the cycle (2023). Yield is 5%. 

oil/gas

Schachter has liked this company for a long time. The company is in the midst of an acquisition ($320 million) that will add significantly to its production. The dividend will increase if the acquisition goes through. He has a $3.70 12-month target and an $8.70 target for the cycle (2023). Yield is 5%. 

oil/gas
Josef Schachter

President, Schachter Asset Mana...

Price Price
$2.650
Owned Owned
Yes

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WAIT

Likes it a lot. He is still waiting to add it to his action alert list. Its metrics are excellent but tax loss season is coming and the price will come down. The company has been buying its stock back aggressively, at an average price of $3.47. The price keeps going down and the company has slowed down its buyback. With tax loss selling, he thinks the price could drop below $2. He would buy it himself for that price. He sees this as a $3.70 stock in late 2019 and an $8.50 stock 5 years later. It was $20 in 2014

oil/gas field services

Likes it a lot. He is still waiting to add it to his action alert list. Its metrics are excellent but tax loss season is coming and the price will come down. The company has been buying its stock back aggressively, at an average price of $3.47. The price keeps going down and the company has slowed down its buyback. With tax loss selling, he thinks the price could drop below $2. He would buy it himself for that price. He sees this as a $3.70 stock in late 2019 and an $8.50 stock 5 years later. It was $20 in 2014

oil/gas field services
Josef Schachter

President, Schachter Asset Mana...

Price Price
$2.270
Owned Owned
No

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PAST TOP PICK

(A Top Pick December 18, 2017. Down 33%). He was early in his recommendation of this company, but it is doing the right things. It is extending the maturity of its debt. The company was over $3 a year ago. Production in Q2 was up compared to Q1. It will drop for Q3 because of a slowdown in production due to the low AECO prices (see http://www.gasalberta.com/gas-market/market-prices). Q3 will be the trough in production. Bellatrix has just announced a junior acquisition that will add about 2000 boe per day. He expects to see a 40,000 run rate in Q1 with over $1 in cash flow. Book value is $12.11, which is ridiculously higher than the current price. The company is in the Spirit River play, which is liquids-rich. He expects the stock to rise to $7 a year from now.

oil/gas

(A Top Pick December 18, 2017. Down 33%). He was early in his recommendation of this company, but it is doing the right things. It is extending the maturity of its debt. The company was over $3 a year ago. Production in Q2 was up compared to Q1. It will drop for Q3 because of a slowdown in production due to the low AECO prices (see http://www.gasalberta.com/gas-market/market-prices). Q3 will be the trough in production. Bellatrix has just announced a junior acquisition that will add about 2000 boe per day. He expects to see a 40,000 run rate in Q1 with over $1 in cash flow. Book value is $12.11, which is ridiculously higher than the current price. The company is in the Spirit River play, which is liquids-rich. He expects the stock to rise to $7 a year from now.

oil/gas
Josef Schachter

President, Schachter Asset Mana...

Price Price
$1.400
Owned Owned
Yes

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PAST TOP PICK

(A Top Pick December 18, 2017. Down 25%). The company is about 75% natural gas. They generated cash flow last quarter of 25 cents on 68000 boe per day. He expects 2019 cash flow to grow to $1.08, compared to a share price of $1.47. Book value is $5.78. This will be a significant beneficiary of LNG Canada for 2023, along with Painted Pony, Birchcliff and Tourmaline.

oil/gas

(A Top Pick December 18, 2017. Down 25%). The company is about 75% natural gas. They generated cash flow last quarter of 25 cents on 68000 boe per day. He expects 2019 cash flow to grow to $1.08, compared to a share price of $1.47. Book value is $5.78. This will be a significant beneficiary of LNG Canada for 2023, along with Painted Pony, Birchcliff and Tourmaline.

oil/gas
Josef Schachter

President, Schachter Asset Mana...

Price Price
$1.440
Owned Owned
Yes

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PAST TOP PICK

(A Top Pick December 18, 2017. Up 24%). This will be a significant beneficiary of LNG Canada for 2023, along with Painted Pony, Bonavista Energy and Tourmaline. He sees this rising to $9 in 12 months and $15 in the next 3 to 5 years. Production is 80% natural gas. They will raise their liquids percentage with the new wells in Gordondale. Book value is $6.42 so the company is still trading at a discount to book.

oil/gas

(A Top Pick December 18, 2017. Up 24%). This will be a significant beneficiary of LNG Canada for 2023, along with Painted Pony, Bonavista Energy and Tourmaline. He sees this rising to $9 in 12 months and $15 in the next 3 to 5 years. Production is 80% natural gas. They will raise their liquids percentage with the new wells in Gordondale. Book value is $6.42 so the company is still trading at a discount to book.

oil/gas
Josef Schachter

President, Schachter Asset Mana...

Price Price
$5.110
Owned Owned
Yes

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BUY on WEAKNESS

They had a recent management change. They sold an asset and so production is down a little. The company is in the process of selling another 50000 boe per day to reduce debt by about $1 billion. The yield at $8 is an attractive 4.4% and the company considers it secure. The company is attractive at this price, but tax loss selling season will be nasty for this stock. He thinks the stock could drop below $7.50. He will recommend it as a buy at $7.50. The 52-week low was $6.66. He is not sure it will drop that far. This company has very good assets and is a name investors should want to own for the long term. Yield 4.4%. 

oil/gas

They had a recent management change. They sold an asset and so production is down a little. The company is in the process of selling another 50000 boe per day to reduce debt by about $1 billion. The yield at $8 is an attractive 4.4% and the company considers it secure. The company is attractive at this price, but tax loss selling season will be nasty for this stock. He thinks the stock could drop below $7.50. He will recommend it as a buy at $7.50. The 52-week low was $6.66. He is not sure it will drop that far. This company has very good assets and is a name investors should want to own for the long term. Yield 4.4%. 

oil/gas
Josef Schachter

President, Schachter Asset Mana...

Price Price
$8.140
Owned Owned
Unknown

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BUY
Crew Energy Inc.(CR-T) 

October 9, 2018

Book value is $5.74. Debt is not a problem: $349 million debt compared to $830 million in equity value. 26% liquids and oil, 74% natural gas. $7 target in the next 12 months. He expects it to drop a little in tax-loss selling season.

oil/gas

Book value is $5.74. Debt is not a problem: $349 million debt compared to $830 million in equity value. 26% liquids and oil, 74% natural gas. $7 target in the next 12 months. He expects it to drop a little in tax-loss selling season.

oil/gas
Josef Schachter

President, Schachter Asset Mana...

Price Price
$1.740
Owned Owned
Yes

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BUY on WEAKNESS
Tourmaline Oil Corp(TOU-T) 

October 9, 2018

This is a trophy stock. It is one of the best run companies. It was $60 in 2014. Their production is 18% liquids and they are bringing on more liquids. They will be a significant beneficiary of LNG Canada for 2023, along with Painted Pony, Birchcliff and Bonavista. They have increased their dividend from 0 to a 2% yield. He expects cash flow above $4 per year. Book value is $27. He expects it to drop below $20 in tax loss selling season and sees that level as a table-pounding buy.

oil/gas

This is a trophy stock. It is one of the best run companies. It was $60 in 2014. Their production is 18% liquids and they are bringing on more liquids. They will be a significant beneficiary of LNG Canada for 2023, along with Painted Pony, Birchcliff and Bonavista. They have increased their dividend from 0 to a 2% yield. He expects cash flow above $4 per year. Book value is $27. He expects it to drop below $20 in tax loss selling season and sees that level as a table-pounding buy.

oil/gas
Josef Schachter

President, Schachter Asset Mana...

Price Price
$23.410
Owned Owned
Unknown

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BUY on WEAKNESS
Vermilion Energy Inc(VET-T) 

October 9, 2018

They did not cut the dividend when the stock bottomed in 2016. When this stock trades at a 4% dividend yield, that is the high end of its range. When it trades at 7% yield, that’s the low end of its range. He sees a $40 price as low compared to his $50 1-year target. He has a $70 5-year target. He thinks it might drop below $40 in tax-loss season. Yield 6.5%

oil/gas

They did not cut the dividend when the stock bottomed in 2016. When this stock trades at a 4% dividend yield, that is the high end of its range. When it trades at 7% yield, that’s the low end of its range. He sees a $40 price as low compared to his $50 1-year target. He has a $70 5-year target. He thinks it might drop below $40 in tax-loss season. Yield 6.5%

oil/gas
Josef Schachter

President, Schachter Asset Mana...

Price Price
$42.380
Owned Owned
Unknown

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