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

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Crescent Point Energy Corp (CPG.TO)

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11.72

-0.04 (0.34%)

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

802 watching

TOP PICK

They have been buying back stock and sold mid-stream assets. It is trading at 18% free cash flow yield. It is 2.7 times enterprise value to cash flow, which is staggering considering multiple compression. They are not as exposed to pipeline bottlenecks as others. (Analysts’ price target is $7.40)

DON'T BUY

He would not buy any E&P companies right now. You need a rally in the commodity price to get people excited. Companies are just paying down debt and buying back stock, but that won't get any attention. Look elsewhere.

PAST TOP PICK

(A Top Pick Dec 31/18, Up 20%) He still likes it. They did wrong things in the past--issuing alot of equity--but are doing the right things now--share buybacks and selling off assets. These please shareholders, not production growth. CPG just sold its infrastructure assets last month at 7x, but the stock is trading at 3x. The balance sheet is now 2x debt-to-EBITDA.

TOP PICK

They are well-positioned, what he wants an energy company to do. Forget about growing production, but rather get out of residual assets, improving their balance sheet and buying back shares. They're doing the opposite of what they did for years--issuing equity which drowned out valuation. They finally listened to shareholders and have reversed course. Great value at 3x operating cash flow. They just sold off infrastructure assets in Utah at 8x. Free cash flow yield is nearly 20%, which is great value. (Analysts’ price target is $7.40)

BUY

They just announced a sale of mid-stream operations in mid-Saskatchewan. An infrastructure deal will knock the debt down when it closes in Q1. They will continue to be able to pay down debt. His target is $7.50-$8.

HOLD

The new CEO has payed down debt, rationalized assets and bought back stock. They are now monetizing assets at 10 times cash flow when the company is only trading at 2.8 times. All good things. If it traded back to 5 times cash flow, its share price would rise 100%.

DON'T BUY

Oil prices? He doesn't have an oil price forecast. CPG is like a lot of other companies -- divesting assets and paying down debt. He thinks Canadian equities are dead in the water here and does not know what catalyst will help change things.

WAIT

Average down? The mid-cap energy trade has been very tough. CPG is executing on their plan, paying down debt, changing management and selling assets. If you like oil, thinking it will go up in value, it would be a good buy. We need to see large foreign investors coming back in again. You might buy CNQ instead.

TOP PICK

They are buying back stocks and breaking the trend of issuing more equity and growing. They have decent light oil, strong production and good cash flow generation. The energy sector risk is there, but it is a good buy among them.

COMMENT

They're paying down debt and buying back shares. He still doesn't like this stock or Canadian oil stocks. Wait longer. They report in November. He hopes the balance sheet looks better.

HOLD

$10 in a year? They have under gone a management change and he likes the new team. They have sold assets, reduced operational costs, and maximizing cash flow to buy back stock. He would like to see them be more aggressive on the buyback next year. The stock trades at 3 times cash flow and at 74% of their liquidation value -- incredibly cheap. They plan to monetize some of their infrastructure and are buying back $100 million in shares by year end. He would like to see them buy back 10-15% of their shares next year to improve all metrics, while not foolishly production. Back to $10 would require a multiple of 5 times cash flow -- he is optimistic.

PAST TOP PICK

(A Top Pick Nov 19/18, Up 3%) They had a massive asset sale. They are still planning to try to monetize some infrastructure assets.

DON'T BUY

He thinks CPG-T should merge with a small company and re-brand itself. It looks like others in the space that have lost their credibility. They are selling assets, shrinking production, to improve the balance sheet. At best $8-$9 is the upside potential for the share price. He would prefer others in the space.

DON'T BUY

They sold some assets in Utah and southeast Saskatchewan. He has a $7 target. He is not enamoured with it because they talked about selling Balkan assets, then they said they would sell mid-stream assets and then changed again when they actually sold assets. Are they selling because they have to sell or because they are focusing on their best assets?

BUY

He does not know that tax loss selling could start now. He thinks people will get out of one energy and then get into another. CPG-T had quite a rally this month. It has run into resistance. It is above the 200 day average.

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