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TOP PICK
The CEO is a good micro and macro thinker. The Husky purchase debt is being paid down quickly. Once this is done, they should introduce a meaningful share buyback program. Trading at a material discount to peers. Trading at a 27% free cashflow yield right now. Has lots of flexibility on how to return capital to investors. Could go up to $23 per share. (Analysts’ price target is $16.02)
oil
gas
TOP PICK
Trading at 2.2x enterprise value to cashflow, which is cheaper than earlier this year. Q1 of next year should see a material share buyback. Trading at a 30% free cashflow yield. The low valuation will be rerated. Could trade at a 5x multiple, which would be a 153% upside. (Analysts’ price target is $12.19)
oil
gas
COMMENT
Pretty gratifying to see the calls coming into fruition about limited oil supply globally. There is still some bearish overtone. People do not want to believe due to the severity of the downturn. They are just getting over this trauma. All the gains are from specialist and retail. Generalist and institutions have been missing. Now seeing a surge in interest from Europeans even. Cannot resist the performance for much longer. Year end performance will be strong. The backdrop is very bullish for oil. Energy stocks today are cheaper today than January of this year. The party has just started.
DON'T BUY
Got tired of the chronic underperformance. The past 2 years, the messaging from management has changed consistently. The messaging has confused people what they want to achieve. The stock is cheap. Trading at 2x cashflow. Free cashflow at 38%. Could be a value trap. Need to do a sharebuy back or dividend.
oil
gas
BUY
Owns it for the longevity of the assets and miss pricing. Leverage has always been a problem. Trading at 44% free cashflow yield at $70 oil. Fair multiple is 6x, which would bring free cashflow to 15%. Would get a $20 target with this. The stock could continue to work. On the cusp of return of capital.
oil
gas
BUY
Bought at 0.18 cents and the stock has rallied. Bought it for rerating in cashflow. Stock has worked out well. The next catalyst is to refinance debt that is due February of next year. The notes are trading at 0.98 cents which means the bond market thinks it will get refinanced. Positive catalyst for the shares.
oil
gas
BUY
Has been a favourite for him. A top holding. Did a great job of reinvigorating asset base. Stock has done pretty well and has been rerated. 27% free cashflow yield. Performance in 2022 will be determined by who returns the most capital to investors. Wants to see a 5% dividend with 10% buy backs.
oil
gas
COMMENT
Natural gas versus oil. There has been consolidation of the natural gas producers so there is supply discipline. Demand, the summer has been hot. In Europe, there are energy shortages. Outlook in LNG is good. We may see some seasonal sell off. The winter, if cold, will push natural gas higher. How long will current prices last and when will the supply response come? Gas to oil switch in the UK is coming.
