BP PLC (BP)

Any time he sees a dividend over 5%, he starts to get a little concerned. Higher-quality names like this have really seen capital flow into them, given the meltdown we have seen on oil. Trading in the 30s in regard to PE, and at these levels there isn’t much patience for any bad news, and he would expect a pullback.

Very much like all the other super majors. A very disciplined, very large project company with global assets. They are all categorized as safer businesses, more steady stream, not a lot of growth, and in really bad oil markets funds tend to allocate their money into them as safer places. His view is that the oil cycle is turning. This one is cheap trading at 4.5 X this year’s EBITDA. There is virtually no growth in the business. Prefers Suncor (SU-T), which has non-declining assets. (See Top Picks.)

(Bought when Cdn$ was at par. Sell and convert back to Cdn$?) You probably made 30% on the currency, but you lost 30% on the stock. Sector is cheap now, so wouldn’t recommend selling, but would recommend buying. He would look to sell some of those and lock in the FX gain, but roll that exposure into a Canadian ETF like an XEG-T so that when oil recovers, you don’t have the currency risk.

Would not have particularly favourable momentum characteristics for him. It is great that the lawsuits are behind them, but in general the price momentum on some of the stocks is not favourable.

(Top Pick Apr 24/14, Down 7.09%) We may see a roll over again, but otherwise he would say it is a buy. Chip away at it.

(Top Pick Jan 6/14, Down 8.78%) It is such a cheap stock with a single digit multiple and a 5% yield, but that could get cut. It throws off a ton of free cash flow. They may become a net acquirer of cheap energy assets.

British Petroleum (BP-N) or Royal Dutch Shell (RDS.B-N)? If you are looking for as much safety as you can in the commodity sector, Royal Dutch Shell has the best balance sheet of the 2. If you want a little more volatility, this would be the one. He likes both companies.

(A Top Pick Dec 5/13. Down 11.96%.) Feels the majors generally are on sale. They have performed better, relative to the smaller/mid-cap stories. It gives you a relatively defensible dividend and you will get some upside. Up 13.5% from its 52 week low.

(Top Pick Dec 05/13, Down 5.72%) He is still buying it for clients. The Russian event affected this stock. This company is on sale and longer term oil prices are going higher.

This has been a challenging story over the last few years. Strategically the Macondo disaster in the US basically forced them to strategically make some moves that a normal operating company wouldn’t want to be doing. Sold off some very prospective energy assets in the Gulf of Mexico and got into some huge litigation problems. This would not be his favourite name.

It was on sale because of the Gulf fiasco. They started to recover from that, then they sold a major asset and now there is the Ukraine situation. He thinks it will go higher. Has an attractive dividend. It has a substantial exposure to Russia.

Probably the cheapest of the major integrated oil/gas companies. The negative is that a good chunk of their oil production is in Russia, so it deserves to trade at some discount. They are almost finished paying off the issues with their well disaster. Heading into a period where free cash flow will be increasing. Significant dividend increases are in the cards, along with significant share buybacks. Feels it is worth about a 3^rd higher than what it is trading at, so to him it is value. Dividend of almost 5%.

If Exxon Mobile (XOM-N) is the best run of the global super majors, this one, demonstrably, is the worst run. Cheap stock at about 10X earnings with a yield of about 4.8%. This is a business that needs to shrink dramatically for it to have any chance of growing.

(Top Pick Apr 24/13, Up 23.28%) The liabilities are effectively dealt with. They are growing the company. Longer term this will be a growth story.

This is probably the cheapest of the major oil/gas companies still suffering under the shadow of the Macondo spill. About a quarter of their production is in Russia, which is always a risk. The healthy dividend is rock solid. Focused solely now on driving shareholder value so there will probably be share buybacks and dividend increases. Trading at a very cheap valuation.