EnCana breakup produces two new buys

Article Excerpt

ENCANA CORP. $30 (Toronto symbol ECA; Conservative Growth Portfolio, Resources sector; Shares outstanding: 750.2 million; Market cap: $22.5 billion; Price-to-sales ratio: 2.1; Dividend yield: n.a.; SI Rating: Average) and CENOVUS ENERGY INC. $25 (Toronto symbol CVE; Conservative Growth Portfolio, Resources sector; Shares outstanding: 750.2 million; Market cap: $18.8 billion; Price-to-sales ratio: 1.1; Dividend yield: n.a.; SI Rating: Extra Risk) are now trading as separate stocks after EnCana split itself into two separate companies. One kept the EnCana name and trading symbol, and focuses on unconventional natural gas. The other operates as Cenovus Energy Inc. and specializes in oil-sands projects, oil refineries and conventional natural gas. Shareholders received one share in each of the two new firms for every EnCana share they owned. EnCana recommends that shareholders allocate 51.5% of their adjusted cost base to the new EnCana, and 48.5% to Cenovus. The two stocks could stagnate for some months while investors evaluate them. However, we see both as buys for long-term gains…

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