oil prices

Slowing industrial activity in North America and China has pushed down oil demand. At the same time, rising shale oil production from North Dakota’s Bakken region has increased inventories. Both of these factors have weighed on prices. However, low prices are a mixed blessing for integrated oil companies like Suncor Energy. They earn less profit by producing crude, but their refineries also pay less for the oil they use....

Slowing industrial activity in North America and China has pushed down oil demand. At the same time, rising shale oil production from North Dakota’s Bakken region has increased inventories. Both of these factors have weighed on prices.

Low prices are a mixed blessing for these three integrated oil companies....

SHERRITT INTERNATIONAL $4.74 (Toronto symbol S; TSINetwork Rating: Speculative) (1-800-704-6698; www.sherritt.com; Shares outstanding: 296.9 million; Market cap: $1.4 billion; Dividend yield: 3.6%) reported cash flow of $0.20 a share in the three months ended March 31, 2013. That was down 35.4% from $0.31 a year earlier. A decline in coal sales and lower nickel, cobalt and oil prices were the main reasons for the drop.

Sherritt recently raised its quarterly dividend by 13.2%. The shares now yield 3.6%.

The company needs an improving global economy to fuel commodity demand. But its low production costs and ongoing geographic diversification enhance its prospects.
...

DOMINO’S PIZZA INC., $55.98, symbol DPZ on New York, is the world’s largest chain of pizza stores that offer takeout and delivery. It operates10,040 outlets in the U.S. and over 70 other countries. Franchisees run most of these stores. Excluding one-time items, the company’s earnings per share rose 25.5% in the quarter ended March 24, 2013, to $0.59 from $0.47 a year earlier. Sales rose 8.6%, to $417.6 million from $384.6 million. Same-store sales rose 6.5% internationally and 6.2% in the U.S. Domino’s continues to boost its sales by aggressively promoting its new pizza recipes. It’s also profiting by moving into ordering online and through software applications, or apps, on smartphones. In addition, Domino’s still has lots of growth potential overseas....

CGI GROUP INC., $31.31, Toronto symbol GIB.A, jumped 15% this week after the company reported much better-than-expected quarterly results. CGI is Canada’s largest provider of computer outsourcing services. The company helps its clients automate certain routine functions, like accounting and buying supplies. That makes companies more efficient and lets them focus on their main businesses. In August 2012, CGI completed its $2.7-billion purchase of Logica plc, a U.K.-based firm that provides computer-outsourcing services in 36 countries....

Barrick Gold, $19.02, symbol ABX on Toronto (Shares outstanding: 1.0 billion; Market cap: $19.5 billion; www.barrick.com), has moved down along with gold prices. Gold has fallen from almost $1,800 U.S. an ounce in September 2012 to $1,470 U.S. today; Barrick’s share price is down from just over $55 in that same period. The company is now considering selling some of its less important gold assets, including three mines that make up its Yilgarn South Division in Australia. These projects could be worth at least $600 million U.S. Barrick is also taking a close look at all of its current assets and could sell some that are currently underperforming. That may include its Barrick Energy division, which it entered into as a hedge against rising oil prices but hasn’t performed as well as expected....

FAIR ISAAC CORP., $44.18, symbol FICO on New York, makes FICO Scores, a computer program that helps businesses make better decisions about customer creditworthiness. FICO Scores dominates this niche market. In addition, Fair Isaac continues to profit by selling software that helps credit card issuers control fraud and analyze cardholders’ spending patterns. In its fiscal 2013 second quarter, which ended March 31, 2013, Fair Isaac’s earnings per share before one-time items rose 4.4% from a year ago, to $0.69 from $0.66. Revenue rose 12.4%, to $179.3 million from $159.5 million. That’s largely because the company recently acquired Adeptra, which makes systems that let businesses communicate with customers through a range of channels, including voice, instant messaging, mobile applications and email. Fair Isaac continues to spend around 8% of its revenue on research. That lets it keep producing innovative new products that help it stay ahead of its competitors....

SUNCOR ENERGY INC. $30 (Toronto symbol SU; Conservative Growth Portfolio, Resources sector; Shares outstanding: 1.5 billion; Market cap: $45.0 billion; Price-to-sales ratio: 1.1; Dividend yield: 1.7%; TSINetwork Rating: Average; www.suncor.com) has cancelled its $11-billion Voyageur oil sands upgrader project, which would have converted the tar-like bitumen into a lighter form of oil that is easier to pump through pipelines to refineries. The company cancelled Voyageur because a lack of new pipeline capacity is hurting oil prices and the project’s economic viability.

As part of this decision, Suncor paid $515 million to Total SA for its 49% stake in Voyageur. The price is equal to 11% of the $4.9 billion, or $3.16 a share, that Suncor earned in 2012. Buying back this stake will make it easier for Suncor to use some of Voyageur’s equipment at its other oil sands projects.

Suncor is still a buy....

SUNCOR ENERGY INC. $30 (Toronto symbol SU; Conservative Growth Portfolio, Resources sector; Shares outstanding: 1.5 billion; Market cap: $45.0 billion; Price-to-sales ratio: 1.1; Dividend yield: 1.7%; TSINetwork Rating: Average; www.suncor.com) has cancelled its $11-billion Voyageur oil sands upgrader project, which would have converted the tar-like bitumen into a lighter form of oil that is easier to pump through pipelines to refineries....

Encana took its present form on December 1, 2009, after the old EnCana Corp. split itself into two new companies: the new Encana, which focuses on natural gas, and Cenovus Energy, which specializes in oil sands. Lower gas prices have pushed Encana’s shares down by about 36% since the split. Oil prices have weakened lately, but Cenovus’s stock is still up about 12%. Here is our latest report on these two energy stocks....