Latest Stock Buy or Sell? Make More Informed Decisions!

Energy seasonality. There are 2 seasonality factors in the Canadian energy patch. #1 the general stock market will dictate how equities perform. The general market seems to use the “sell in May and go away” but typically some years it starts a little bit earlier. Who knows? Usually in March, April and May there is some sloppiness with increased volatility. On the oil/gas side of things in Canada, we have spring break up in a lot of Alberta in a lot of the producing regions, where the ground is thawing and they don’t like to move the drilling rigs through softer ground for environmental reasons. There is essentially a month or so where activity slows down. This often leads to less news releases out of companies and a bit of a lull. You are probably getting a good entry point over the next month or so where there is a bit of weakness. The tailwinds on energy stocks this year will be a lower Cdn$.

If the stock stays flat here and you clip an 18% yield, which is not a bad return. The risk is that eventually they may have to cut the dividend. Pretty hard for them to raise equity here to do more acquisitions or finance growth for issuing equity with an 18% yield. Have gotten themselves into a bit of a corner here with some poor operational results and packed on too much debt. $5 is probably the right price for the stock but your 18% yield could become 10% pretty quickly if they decide to cut it later this year. There are lots of companies out there that give you that same total return potential of 15%-20% without the risk of a dividend cut. These would be names such as Whitecap (WCP-T), Torc (TOG-T), Crescent Point (CPG-T), Twin Butte (TBE-T), Peyto (PEY-T) and ARC (ARX-T), which can give you 15% total return without a potential dividend cut.

Thinks the 9.5% yield is sustainable as long as oil is in the $85-$100 range. It is in their DNA to try and bump their dividend once a year and they have done that this year already. He is looking for it to be in the $6.50 range 12 months out, maybe higher. An 8% 9% yield and 10% growth is a pretty compelling total return for a yield and growth type of investment. Just bought 19.9% of Longview (LNV-T) at around $4.40. A very strategic buy.

Thought about having this as a Top Pick. You should see massive expansion of volumes of 20,000 BOEs a day up to 70,000 over the next year or so as they bring on their Muzro (?) gas plant. That is the big risk. Does this come on in time by June and will the production start to kick in. If they meet their goals, he thinks this could easily be a $70 stock in 2 years.

His internal target price is about $18. There was insider buying at the $12 level and he added to his position and this has worked out quite well. If gas can hold in the $4.50 range, he believes this would be an $18 stock. 5.3% yield.

(His 3 Top Picks are all based on continuing strength in natural gas prices.) Has recently been drilling some very good wells in the Wilrich where they are partnered with Bonavista (BNP-T). As well there are more results out of their delineation of their Simonette properties both to the West and to the North. If those are successful in the next month or so, that will show that their Simonette has actually more scale to it. Has been a laggard in the market, but is finally getting a little respect. Thinks the upside is $3 a share. Canada Pension Plan’s recent investment gave it a very strong stamp of approval.

(His 3 Top Picks are all based on continuing strength in natural gas prices.) A management team where he has made a lot of money on another operation that was acquired by Exxon. Has a lot of respect for management. Very prudent in the way they manage their inventory of projects. Mostly unhedged so in the last month or so, they were getting over $10 for their gas on a daily basis. Expects to see great cash flow out of this company. S&P comes out with their Index inclusion tomorrow and he thinks they will make the test and be included in the TSX Composite, which will bring in a lot of new investors into this company.

(His 3 Top Picks are all based on continuing strength in natural gas prices.) Likes the way management has operated in other operations, using very low debt and very prudent management. This is a play on “dry gas” as opposed to “liquids rich” gas, which is a bit higher cost, but no one is buying dry gas so they are getting their properties very cheap. Hopes to see a dividend come into this company over the next year. Can see this being a $2 stock if gas cooperates.

Markets. There are certain sectors where the time for seasonality is pushed back a little bit, probably 2-3 weeks. That means you can focus on those sectors as they become available. One example is First Trust NASDAQ Global ETF (CARZ-Q). It is the time of year when people are buying new cars and car stocks go higher. The best time to Sell in the springtime, on average, is the 1^st week in May. That can vary. In a US midterm election year, it tends to be little bit earlier, around the 3^rd week in April. Political rhetoric can cause a lot of uncertainty, which causes stock prices to come down, from the middle of April right through until the beginning of October. The great thing is that the bottom of the 4-year cycle occurs in the 1^st week of October and after that, markets got significantly higher.

Technically, right now, the trend for the stock is down. Also, it is underperforming the Canadian market. It is also trading below its 20 day moving average.

Chart shows that the trend is on the upside and it is trading slightly better than the TSE Composite. Trading below its 20 day moving average. You want to wait until the stock starts showing signs of support. That would probably come close to the $45 level where support was previously indicated.

There are 2 sweet spots a year for the US market, particularly for this stock. One period is from the end of October until the end of December, the Christmas buying season. The other one is from the end of February right through until the end of April, the spring buying season. We have just entered into this period right now. You would own this through until about the 1^st week in May and that is when you will take some profits.

This has very strong seasonality. Historically it moves significantly higher from around October each year, right through until around February. Recently this has not been doing that well. It broke a key support level in the last couple of days. This is a concern as it means the stock has now established a downward trend. Also, it is underperforming the Canadian market and is trading below its 20 day moving average.

This stock is clearly in an upward trend. Also, outperforming the market and is currently trading above its 20 day moving average. Historically, this stock has done very well from the end of February right through until the end of April.

Chart shows a distinct upward trend, outperforming the Canadian market and is currently trading above its 20 day moving average. That’s a score of 3 of the 3. Seasonally historically the energy sector does very well from around the 3^rd week in January right through until the 1^st week in May. Looks very attractive. Any weakness you see in the next little while would be a classic opportunity to accumulate.