Investment Q&A

Q: I want to re-visit a question I asked previously (based on Eric Nuttall's appearance on BNN Bloomberg) and Lionel's input on it. I've reproduced those questions and answers below for reference.

To clarify, Eric was not bullish on natural gas, at least over the next year. What he was feverish on was heavy oil, and his top picks were the three companies above.

I had mentioned Tourmaline Oil which perhaps shifted the conversation toward natural gas, but I was really interested in your take on the heavy oil companies.

Do you share his enthusiasm about heavy oil? I'd appreciate if you could rank these companies. CVE seems the biggest but I sense he sees more potential in the other two which are smaller.



Q: Eric Nuttall was very bullish, almost feverish, on oil (represented by the companies above) while being down on natural gas. To what extent do you agree?

Asked by Kevin on February 27, 2023
5I RESEARCH ANSWER:
We like Eric and used to work right beside him (Peter answering). He is bright and gained lots of experience over the past 20 years. He showed a lot of guts in the oil crash when his fund dropped 70% in three months and fell to $20M in assets (he now manages more than $2B). The sector is very cheap, and vs past cycles corporate balance sheets are very strong. Certainly the lack of spending may results in higher prices over the next three years (depending on the economy). But...it will always be cyclical. The price of oil in fact is even down 14% from before the Ukraine war started. But we think some sector representation certainly makes sense. The TSX is currently at 17.4% energy. We might consider that a bit on the high side. In terms of natural gas, it can be very weather dependent, but we would be more bullish than Eric; the price has dropped so much this year, but it is also dependent on drilling, and the price drop is going to cause even less spending to be done on new gas wells.

Q: I am optomistic that Peter and Eric Nuttall are bullish on the gas sector, as in the 5i reply to Kevin's query (Feb 27). What are your views on XES? Technically, it looks like it has a huge runway to the upside ...Thanks....Lionel

5I RESEARCH ANSWER:
XES is the SPDR Oil and Gas Equipment & Services ETF. Certainly there is upside potential as oil and gas companies spend. However, there has been a trend in the industry towards dividends and buybacks, so spending this cycle may be less than in other periods. Still, the fund is up 38% in the past year, and its 35 holdings look solid. We would be OK owning this for sector exposure, with the understanding that it is always going to be cyclical.

Q: Eric Nuttall was very bullish, almost feverish, on oil (represented by the companies above) while being down on natural gas. To what extent do you agree?

Q: Your thoughts on CVE's recent quarter. Thanks.
Robert

Q: Good Morning 5i
I read Cenovus results this morning. There is no mention of a quarterly or special dividend. When would see them announcing dividends?
Thanks

Q: what are your 3 top stocks related to the oil industry?

Q: hi. can you rate these as a buy, sell or hold please. long term investor.
cheers, Chris

Q: What is your perspective on Cenovus compared to Suncor and CNQ for a 2% allocation in a well diversified Canadian/US equity portfolio?

Q: Is there a particular reason that you do not own more energy stocks in the portfolio’s and are underweight the sector? Seems somewhat surprising in light of many companies returning capital to shareholders via significant dividend increases and share buybacks this year.

Q: Hi Guys
I'm having a hard time wrapping my head around how Asset Writedowns &Restructuring Costs can actually add to Cash from Operations, in the case of Cenovus say 1.5 Billion. Can you enlighten me on how this should be perceived as Positive Cash Flow
Thanks Gord

Q: Of the above three energy companies, please rank for growth prospects over the next three years, assuming oil prices stay around the same as they are now.
Thanks

Q: Hi Team,
With the recent slump in some of these oil names, do you see a name like WCP being bought out by a bigger company such as CVE that operate in some of the same area? You would think M&A would start happening with valuations where they are on some of these names. CVE with a P/E of 10.9, and WCP only having a P/E of a mere 2.0 (according to my trading platform numbers). This all being said, is it time to buy some of these high quality mid cap oil names that have been hit recently? Your comments are appreciated.

Q: what are the current annual percentages of dividend, debt and free cash flow yield for each of these companies. use as many question credits as needed

Q: What are your top picks in the Canadian energy sector? And why?

Thanks very much

Q: How would you classify the above stocks as to gas or oil. Thanks
Mike

Q: Hi. I own these oil stocks and have to get rid of two or three. Which three would you sell first and in what order? Thanks Paul

Q: I unfortunately bought these companies recently.I am down a huge percentage in a few short weeks.Are there any names here that I should keep?I thought I was buying high quality basket.Does energy collapse in a recession?

Q: Can I please get your outlook on the energy sector, and the holdings above- how would you rank them for a 1 year hold, would the ranking change for a 5 year hold?
There is the view that energy will come back to represent a larger % of the index again.

Q: What is your opinion of this ETF for a core long term holding for exposure to the oil and gas industry? Is the MER high/low in your opinion. What alternatives if any would you suggest? Thanks

Q: I am thinking of buying these companies in my tfsa account in equal weights. Do you have any concern with any of these companies and would you be able to rank them in order of possible upside? Thank you

Q: i do not know much about oil but like buy in cash account for dividend.
can u tell me your top 3 US oil company today?
can u tell me top 3 Canadian oil companies

thanks all your help