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Resources. After the Asian flu/Russian debt crisis in 1998, you also had the original Internet boom, and no one cared about resources. We are now at a point where we finally have legitimate good valuations. 5 years ago, we were playing defence because valuations were not there. We have now recovered from that and are now in an environment that we can get really excited about. Businesses are getting incrementally better and are throwing cash flow, and you don’t have to pay a lot for them. Resource stocks are “crazy” out of favour, which is great. 12-18 months from now, the supply stabilizes and demand keeps growing.

This has been a great company. What is really astounding is their profit margins. They did extremely well in the Viking. It is always curtailed by size, and now they’ve made a big jump into another area. The market is in a “wait and see” mode to see if they can execute the way they have historically. It has gone sideways for 4 years and they are now in the process of reinventing themselves and will probably come firing from a profitability point of view.

We have only a handful of big Canadian companies that are really important. At this level, this is where you want to buy, but first wait for it to break out technically.

Has done a very good job, but probably need a slightly higher oil price to make the numbers work. They just completely blew the financing. When that happens and there is nothing particularly wrong with the company or the acquisition, it’s a “prove me” acquisition and you need a slightly higher oil price. This could go sideways for a bit or go lower.

These are smart guys who are shuffling the pieces around, and you have to be patient. While they are shuffling the pieces, the stock goes sideways. 50% of the hard assets are where they have the tanks, the kind of really dumb metal business that is still needed, and it is all still active. He likes their bonds and that is what he would own, where the risk/reward is really interesting.

Historically, this has been one of the best re-investors of capital in the space. He is always drawn to it because of the rate of return. It is long-term contracts. If you are looking for the safest, long term, underlying cash flow of any pipeline company, historically this company has had that. They did the big Marathon acquisition last year, and he is not 100% sure of how that blends in. There is a little more risk to it, but from the debt point of view, having those bonds out, it is still underpinned by the best cash flow in the industry. He likes this in the low $20, and that is where he would add. Dividend yield of 6.25%.

A really dynamic group. You will get a return when they discover a lot of resource. It is going to be harder to see with their strategy, but one day you will wake up and the company will have found a huge amount of resource, and it will just get sold to somebody. This is one that you just have to sit on and let them do their thing.

(A Top Pick May 10/16. Up 4%.) A year ago, this company had a core value of $700-$800 million with $70 million potential cash flow. They have tons of cash.

(A Top Pick May 10/16. Up 28%.) Doesn’t own this anymore, because of valuation. He likes Enbridge (ENB-T) better because it is cheaper, and has a better trajectory, but with more risk. You are probably going to do well with both, and the rate of return might be close to being the same. Both are fantastic core holdings for anybody’s portfolio.

(A Top Pick May 10/16. Up 14%.) Still a core holding for him. This is something with multiple basins, it has hedging, it has a dividend. At 70,000 BOE’s a day, his expectation is that it can grow organically at 5%-10% a year.

Their execution over the past 12 months has not been great, and the stock market is not very patient. He is just coming around now to look at this, because it just might get too cheap. The impression is that their operating issues are fixable and they are fixing them, but you are not seeing it in the numbers yet.

$8 billion in debt, and at this oil price, the numbers don’t work. Profitability doesn’t work. This year is $8 billion of debt and next year $9 billion and next year is $10 billion and profitability is not there. Oil has to go to $60, which is the problem. This is too volatile for him.

It seems like they need a strategy change. The traditional strategy was “if you build it, they will come”. You actually have to believe that maybe there isn’t a buyer and after building a great big production company you maybe have to live within the numbers. This has to be run for profitability, not for the resource. The strategy change is probably more important than driving the stock price. We have too much gas as well as pipeline constraints in the Canadian Western Basin.

He doesn’t own this because of the level of debt, and he doesn’t know how volatile the stock is going to be. However, he owns the bonds which he bought at a discount. With the bonds, whether the company is solvent or insolvent, he is going to get paid back his bonds.

As energy pulled off, he added to this in the last 48 hours. In a perfect world, he would have waited until it was in the low $30s. Likes the acquisition they’ve done. With the positive energy outlook, he thinks it will throw off fantastic amounts of money in a couple of year’s time. In this bad market, this is one he would add to. Dividend yield of 2.8%. (Analysts’ price target is $52.50.)