Wednesday, October 1, 2014

Canadian Energy stocks and the big myth:

The big Canadian energy names, are they great long term investments? Well the experts seem to love them – go to and you will find the CNQ lovers – and I quote, “His favourite.  Superbly run, Thinks the market is really ignoring that this company gets a lot of their effective pricing from Western Canada Select, This, along with Suncor (SU-T) are probably the 2 premier energy stocks. Has done well this year, Cheap and generates cash flow. Pays a nice dividend. If this is in your TFSA and you are looking out a few years, this is a fine place to be, and - A very dominant producer in the western Canada space. International operations in the North Sea and West Africa. Extremely well managed.”

As for the Suncor lovers, and I quote, “With oil by rail, maybe Keystone does not matter.  They are a refiner with upstream and downstream operations.  This is a very conservative company.  They had very good dividend increases.  Worth buying here, Growth in cash flow over the next number of years is tremendous.  Suncor (SU-T) or Canadian Natural Resources (CNQ-T) for the growth? These are both excellent choices, His model price is $79, an upside of 81%. He is willing to be patient and wait for the value to be created. – and Likes it.  Even though he thinks oil prices are vulnerable, SU looks attractive in the long term.”

The quotes are out of context but the message is clear. The very long term charts display several years of no capital returns – both are components of the S&P/TSX60 index and among the worst performers of the index since their relative 2006 – 2007 price peaks. If you’re looking for growth such as we have in consumer, health care, industrial, financial and the technology sectors don’t look to the big energy names anytime soon – for traders only. Don’t get me started on Crescent Point


Anonymous said...

one of your recent newsletters said traders should reduce and investors should HOLD Canadian energy stocks. I kick myself for not selling as it looks the profits are gone forever. said...


Hang in there - we should get an over-sold bounce - also the dogs are the bigger names as the smaller players all have their own special stories

Bill C

Anonymous said...

Modest gains, if not taken, are viciously taken down. I held CHK for such a long time, thinking 27 should hold but then it was destroyed all within the so called seasonal strength period. The only stocks that seem to hold value are the big big players, Exon, Chevron and the like. If you've got some profits, take it, and reduce whenever you have a chance.