Energy Stocks
Resource and commodity stocks in general should make up only a limited portion of your portfolio—say less than 20% for a conservative investor or as much as 30% for an aggressive investor. And as part of that segment, energy stocks could make up, say half of that total. The rest could be fertilizer stocks, mining stocks and so on.
Oil and gas stocks have been below-average performers lately, and many investors are tempted to get out of the industry altogether. However, the energy sector can play a crucial role in your portfolio as a hedge against inflation. The low inflation rates of the past couple of decades deserve some of the blame for the poor performance of the sector. However, energy stocks will likely rebound in years to come as the global economy recovers.
- Invest mainly in well-established companies;
- Spread your money out across most if not all of the five main economic sectors (Manufacturing & Industry; Resources & Commodities; Consumer; Finance; Utilities);
- Downplay or avoid stocks in the broker/media limelight.
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Energy Stocks Library Archives
Demand for Major Drilling’s specialized services is now recovering. Meanwhile, Computer Modelling is benefiting from expanding oil and gas drilling in response to overall higher energy prices. We think there are still gains ahead for both stocks.
MAJOR DRILLING, $8.04, is a buy. This large contract driller (Toronto symbol MDI; TSINetwork: Speculative) (majordrilling.com; Shares outstanding: 83.0 million; Market cap: $667.3 million; No dividends paid) mainly serves the mining industry.
In the quarter ended July 31, 2023, revenue fell slightly, to $198.9 million from $199.8 million a year earlier....
MAJOR DRILLING, $8.04, is a buy. This large contract driller (Toronto symbol MDI; TSINetwork: Speculative) (majordrilling.com; Shares outstanding: 83.0 million; Market cap: $667.3 million; No dividends paid) mainly serves the mining industry.
In the quarter ended July 31, 2023, revenue fell slightly, to $198.9 million from $199.8 million a year earlier....
CENOVUS ENERGY INC. $28 is a buy. The company (Toronto symbol CVE; Conservative Growth Portfolio, Resources sector; Shares outstanding: 1.9 billion; Market cap: $53.2 billion; Price-to-sales ratio: 0.9; Dividend yield 2.0%; TSINetwork Rating: Average; www.cenovus.com) is now Canada’s third-largest producer of oil and natural gas after Canadian Natural Resources and Suncor....
In the past few years, Ovintiv, formerly known as Encana, has narrowed its focus to four key properties with large reserves. The company is also doing a good job cutting its operating costs. That puts it in a strong position to profit from the recent rise in oil prices and to keep rewarding investors with higher dividends and share buybacks.
OVINTIV INC....
OVINTIV INC....
ARC RESOURCES, $20.28, is a buy. The company (Toronto symbol ARX; Shares outstanding: 607.8 million; Market cap: $12.7 billion; TSINetwork Rating: Extra Risk; Dividend yield: 3.4%; www.arcresources.com) produces natural gas as well as oil. Its average output of 343,630 barrels of oil equivalent per day is 63% natural gas and 37% oil.
Cash flow per share in the quarter ended June 30, 2023, fell 39.5%, to $0.92 from $1.52 a year earlier....
PEYTO EXPLORATION & DEVELOPMENT, $13.20, is a buy for aggressive investors. This gas producer (Toronto symbol PEY; Shares outstanding: 175.1 million; Market cap: $2.4 billion; TSINetwork Rating: Extra Risk; Dividend yield: 10.0%; www.peyto.com) will now buy Spanish energy company Repsol’s assets in Canada for $468 million U.S.
The assets include an upstream oil and gas business and related midstream facilities and infrastructure located predominantly in the Deep Basin region of Alberta.
Repsol’s Deep Basin assets will add about 23,000 barrels of oil equivalent per day to Peyto’s overall production (mainly gas).
Like all natural gas-weighted producers, Peyto will need gas prices to move up in order to report rising cash flow—and sustain its high dividend....
The assets include an upstream oil and gas business and related midstream facilities and infrastructure located predominantly in the Deep Basin region of Alberta.
Repsol’s Deep Basin assets will add about 23,000 barrels of oil equivalent per day to Peyto’s overall production (mainly gas).
Like all natural gas-weighted producers, Peyto will need gas prices to move up in order to report rising cash flow—and sustain its high dividend....
Long-time readers know that we aim to keep you informed of important news about the stocks we cover. That means highlighting developments and plans that promise to bolster investor gains. Here are two buys that stand out this month:
THERMO FISHER SCIENTIFIC INC., $504.89, is a buy. The company (New York symbol TMO; TSINetwork Rating: Average) (thermofisher.com; Shares o/s: 385.9 million; Market cap: $196.4 billion; Dividend yield: 0.3%) has been hired by Denmark-based Novo Nordisk A/S (New York symbol NVO) as its second contract manufacturer for the hugely popular weight-loss drug Wegovy.
Thermo Fisher is doing the filling of the Wegovy injection pens at its factory in Greenville, North Carolina....
THERMO FISHER SCIENTIFIC INC., $504.89, is a buy. The company (New York symbol TMO; TSINetwork Rating: Average) (thermofisher.com; Shares o/s: 385.9 million; Market cap: $196.4 billion; Dividend yield: 0.3%) has been hired by Denmark-based Novo Nordisk A/S (New York symbol NVO) as its second contract manufacturer for the hugely popular weight-loss drug Wegovy.
Thermo Fisher is doing the filling of the Wegovy injection pens at its factory in Greenville, North Carolina....
CAE INC. $33 (www.cae.com) remains a buy. The company expects the global air travel industry will need 1.3 million new pilots, aircraft maintenance technicians and cabin crew over the next 10 years....
TC ENERGY INC., $49.10, is a buy. The company (Toronto symbol TRP; Shares outstanding: 1.0 billion; Market cap: $48.9 billion; TSINetwork Rating: Above Average; Dividend yield: 7.6%; www.tcenergy.com.) has proposed building a new pumped storage hydro power project near Meaford, Ontario....
OVINTIV INC., $64.14, is a buy. The energy producer (Toronto symbol OVV; Shares outstanding: 273.9 million; Market cap: $17.6 billion; TSINetwork Rating: Average; Dividend yield: 2.5%) recently paid private equity firm EnCap Investments L.P....
The shares of oil and gas stocks remain high as energy demand remains strong. We continue to recommend that most investors maintain some exposure to the oil and gas industry as part of a balanced portfolio. But, to cut risk, you should stick with producers that have positive cash flow even in times of low energy prices....