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Canadian Natural Resources Limited (CNQ $64.84)
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ARC Resources Ltd. (ARX $32.22)
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Tourmaline Oil Corp. (TOU $65.80)
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Expand Energy Corporation (EXE $102.15)
Q: I took position simultaneously in those 2 stocks a few months ago for : 1) diversification in the energy sector 2) future potential vs IA .I am surprised that EXE is lagging so much ( - 13%) compared to ARX ( +5%), considering that : it is a larger Cie, closer to terminals , number 1 producer in the USA , etc...your general feedback,and your point of view vs long term safe investments shall be very appreciated .. J-Y
5i Research Answer:
EXE’s recent underperformance could be explained by the company’s heavy investment in capital expenditures in FY2025, which has put pressure on free cash flow and, as a result, its share price. We think once capex peaks and topline growth accelerates, EXE’s performance could improve.
ARX’s capex has stabilized in recent years, which means any upside from high commodity prices can flow more directly to the bottom line. However, ARX also went through a significant acquisition, which has temporarily elevated leverage levels. Overall, both names are fine companies to gain exposure to the industry. With that said, we prefer companies with a strong track record of capital allocation in this field such as CNQ and TOU.