Crescent Point Energy Corp (CPG.TO) Buy, Sell…

Crescent Point Energy Corp (CPG.TO)

11.72

-0.04 (0.34%)

as of May 14, 2024, 8:00:00 pm Market Open.

802 watching

PAST TOP PICK

(A Top Pick Dec 10/19, Down 40%) Of course, he didn't foresee oil prices going negative (in April). CPG is not in a bad position here. North of $40/barrel, they can generate decent cash flow. It's decent.

PAST TOP PICK

(A Top Pick Dec 19/19, Down 44%) They are deleveraging and have pulled off some asset dispositions. They are doing everything the market has asked them for. It is under pressure because you need market scale to attract investors. We need to see further consolidation. You need 19-20% free cash flow yield at $60 oil.

BUY

WCP vs. CPG Both are good given strong sector rotation coming back to energy. Owns WCP for the dividend and growth potential.

WEAK BUY

He met with the new management team a year ago and it seemed they were doing the right things: cleaning up the balance sheet, getting decline rates lower by divesting some properties. The share price is starting to reflect stronger oil markets. He thinks you should go with Whitecap Resources (WCP-T) to invest in the Canadian oil sector. BP-N is another to look at.

PAST TOP PICK

(A Top Pick Dec 19/19, Down 60%) It offers meaningful cashflow. They are treading water but have meaningful leverage to an increasing oil price. At $50, it will trade at 24% free cashflow yield, at $60. 60%. It could potentially amalgamate with other companies in the area.

DON'T BUY

Still a wounded animal, though getting better. Valuation is around 7.8x. It is a levered play to oil, but you have a much better risk/reward with Arc Resources, Advantage, or Suncor. Global growth, US shale, environmental concerns are complicating factors.

PAST TOP PICK

(A Top Pick Oct 18/19, Down 64%) He recommended this long before Covid. Still owns it. The oil industry has been decimated and hard to get excited over.

HOLD

It is undoubtably inexpensive at 3x cashflow. However, he no longer owns this because there are other opportunities, but there is nothing wrong with this name.

PAST TOP PICK

(A Top Pick Oct 18/19, Down 56%) Worries about the balance sheet. Most of these companies don't make money unless oil is over $50.

PAST TOP PICK

(A Top Pick Aug 30/19, Down 43%) The oil fundamentals are stronger now than the start of the year. Looking at the multiple compression that happened in the sector, he expects the value of the stock to double once the macro environment normalizes.

RISKY

It is certainly a high risk/reward play. One thing it has going for it is a very favourable hedge going for it. The question is only going into next year, what will prices look like. They have net debt over $2 Billion. The dividend has been reduced to a level where it is hopefully sustainable. He would prefer others. However, if you want to take some risk in your portfolio, you could be well rewarded.

BUY ON WEAKNESS

Debt has come down after selling many assets in past years from $2.7 billion down to $2.5 billion. Expect production to decline further in coming quarters. CPG will spend money in Q4 which will raise production numbers. It's bounced up very well from its bottom earlier this spring. He's buying on weakness. He likes CPG and its assets. The key is the recovery in oil prices in Q4, which he predicts.

HOLD

They are probably positioned better than most producers right now. It has had a lot of challenges prior to COVID-19. They have been restructuring for some time. They sold off non-core assets. If he were to buy a producer, this would be on his short list.

PAST TOP PICK

(A Top Pick Aug 30/19, Down 44%) They monetized assets last year and started this year with a good balance sheet. At $50 oil prices it trades at 2.8 times cash flow -- historically it traded as high as 8 times. He thinks oil will get back to these levels by end-2020. It remains a large holding in his fund.

COMMENT

SU vs CPG? During the recovery of energy prices, SU has seen its balance sheet improve dramatically. CPG has worked hard and have improved their debt levels. At current oil price levels, both look okay. If he was putting money into energy, he would prefer going with the heavy weight -- SU.

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Crescent Point Energy Corp (CPG.TO)