Today, Larry Berman CFA, CMT, CTA and Peter Hodson commented about whether TMA-T, XTC-T, GC-T, STB-T, HNL-T, BXE-T, ATP-T, TECK.B-T, K-T, CJR.B-T, DHX.B-T, CSS-T, CS-T, ACQ-T, EIF-T, HCG-T, FSV-Q, FSZ-T, BDGI-T, FCR.UN-T, WEF-T, RKN-T, TSGI-T, LEG-T, SGY-T, PRW-T, WEED-T, HSE-T, CPG-T, SGY-T, TOU-T, ZEO-T, LTS-T are stocks to buy or sell.
They have had flat revenues for 4 or 5 years now. There is not a big growth profile to the company. With energy prices as they are, they should tend to do very poorly. You are going to see way more volatility over the next year. The trends aren’t good here. This stock is getting very, very oversold and so you could nibble at it, but it will come with lots of volatility.
There will be a cold war between fracking in Canada and OPEC. For the next year or so there will be playing back and forth. OPEC has said they are okay with oil in the $80-$100 range. In Canada, you have to cut costs, and be sure of your cap-X. A lot of the production in the world will not be profitable. He added SU-T on the weakness to client portfolios. ZEO-T yields 3.4% and on a risk adjusted basis, you get a better quality dividend than the banks.
If you liked it at $50 you have to like it a lot more at $39. You want a half position or less in your portfolio. You have to trim so you can add it back when it bottoms. It could potentially fall a lot lower if the momentum picks up to the downside. Never average down, but average into your position.
Educational Segment. How to Play the Energy Sector. ZEO-T, HXE-T, CLO-T, and XEG-T are the 4 ways to play the energy sector. OXF-T and HXE-T do a covered call overlay, offering two more ways. Equally weighted ETFs usually outperform market weighted indexes. Covered call ETFs usually give you about 2 percentage points more than the others.
Markets. He saw a lot of investors selling because the market was down. Then people said the market was down because oil was down. Two weeks ago was ridicules, just full on fear. There were opportunities. This quarter doesn’t matter. It is the next 5 years that matter. There is a lag effect of 6 to 9 months for the oil price to affect markets. If oil prices stay low for any period of time it is like another stimulus to the economy. Get a weighting in the sector that you are comfortable with. Keep your weightings in the sector.
The sector went down and they raised the dividend, so it seems high. He has no idea what the sector is going to do, but thinks they will continue to pay the dividend. The management needs to be left to do their thing which they have done for the last 20 years. WCP-T is a leader and has outperformed this one.
Markets. When you look at longer term value in oil stocks you have to look at this as a pullback and a buying opportunity. Fundamentally nothing has changed in the last 5 months except punishing Russia. The US is suppressing world oil prices. Forecasts are $70 for the next year or two for oil prices. Accumulate on weakness, not run for the sidelines here. Speculators are still very long oil. The price should not stay below $80 for long. If we get the pipelines going east/west we can sell our oil more easily on world markets and get the price and this will benefit Canada.