Latest Stock Buy or Sell?

We can finally look towards a post-covid world. The market is looking through the lockdown and induced demand loss. The structural loss of US shale and capital investment moving to renewables also points to a positive outlook on crude oil. We see a tightening of supply. He is still confident we will see $50 oil early next year and $60 later that year. Energy companies have enormous free cashflow right now.

They are running at a higher than average leveraged position. Their next maturity is 2023 so there is running room. The outlook for condensate is very positive. 30% free cash flow at $50 oil, and 53% free cashflow yield at $60.

Future of oil. The global population in 2050 will be at 2B people. Mass EV adoption is very challenging due to economics. Just from a base metal perspective, it would consume 85% of lithium and 105% of cobalt reserves in the world. Hydrogen would displace 4% of oil demands in 2050. The notion of peak demand is a fallacy but the reality is that this will lead to peak supply which will be very real.

A go to natural gas name. 19x free cashflow yield right now. Balance sheet and debt is fine. It has relevant obstacles and market cap is a challenge, but it is a hold. It depends on how cold the winter is. If it is a warm winter, get out.

At $45 oil, the target price would be $1.50. At current oil prices, it is trading at a 4% free cashflow yield. He believes this company will not be around for much longer. The valuation is very compelling. However, either they need to get bigger or to get out and be scaled up by someone else.

Their balance sheet needs to be fixed, assets are scattered all over the world so operational focus is difficult. Their valuation is not compelling compared to other names. He has been a sell for years.