Q: After staying subdued for most of this year, Energy names have seen a nice uptick over last few weeks, despite Oil prices still languishing below $60 level. NG is also holding steady above $5 level.
We presently own only ENB, in the sector ( which acts more like a utility ).
Do you see indicators that after a long period of underperformance, the sector is displaying strong signs of a sustained recovery and it's not too late to start ownership ?
If you believe so, would you start with large cap names like SU and CNQ - Any one or Both ?
Thank You
We presently own only ENB, in the sector ( which acts more like a utility ).
Do you see indicators that after a long period of underperformance, the sector is displaying strong signs of a sustained recovery and it's not too late to start ownership ?
If you believe so, would you start with large cap names like SU and CNQ - Any one or Both ?
Thank You
5i Research Answer:
It is, of course, hard to pick inflection points. The sector is cheap, balance sheets are fine, dividends are more secure than in past cycles and companies continue to buy back their stock. There is also upside potential. All this sounds great, but note we would have said this a year ago as well. We think the outlook is good, but we do not see the need for an overweight position yet. An end to the Ukraine War, OPEC and Trump policies could still potentially keep commodity prices somewhat capped. But we think some exposure makes good sense and we would start with larger companies SU and CNQ (both).