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Seven Canadian Energy Stock Picks

by: David Hunkar September 04, 2008 | about stocks: CNQ / ECA / IMO / NXY / PCZ / SU / TLM    

David Hunkar

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Canada is blessed with many natural resources, most of which it exports to other countries, including the U.S. (its largest trading partner). Some of the natural resources are minerals such as gold, uranium, or crude oil (from tar sand); timber is another example.  Since Canada is heavily dependent on commodities, we can say that the Canadian economy is commodity-based. Unlike commodity-driven economies like Russia or Brazil, Canada has a stable political system, a western-style democracy, and is geographically closer to the U.S.

Recently, as the price of crude oil rose, Canadian tar sands became even more valuable. In addition to Calgary, the demand for Canadian crude oil has created a few boomtowns like Fort McMurray in Northern Alberta. Sure, the price of oil fell the past few days, but I believe that this is only temporary. In the next few months, it may start to go back up again. An investor looking to add some stocks from the energy sector can look into the Canadian energy sector stocks that are listed below.

All of the following stocks trade as interlisted stocks in New York:

  1. Encana (ECA) P/E: 16.52 Dividend Yield: 2.25%
  2. Suncor Energy Inc (SU) P/E: 16.46 Dividend Yield: 0.36%
  3. Canadian Natural Resources Ltd (CNQ) P/E: 25.90 Dividend Yield: 0.44%
  4. Imperial Oil Ltd (IMO) P/E: 13.04 Dividend Yield: 0.79%
  5. Petro-Canada (PCZ) P/E: 5.57 Dividend Yield: 1.82%
  6. Talisman Energy Inc (TLM) P/E: 14.03 Dividend Yield: 1.14%
  7. Nexen Inc (NXY) P/E: 11.25 Dividend Yield: 0.65%

In addition, there are other energy stocks like Husky Energy Inc. (HUSKF.PK), but they trade on the OTC exchange. For those of you who have access to the Toronto Stock Exchange, a better pick in the Canadian energy sector would be the ishares Canadian Energy Sector Index ETF [XEG.TO].

Disclosure: None

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This article has 10 comments:

  •  
    Sep 04 04:06 PM
    PCZ and HUSKF are undervalued, the rest are fairly valued at current oil and gas prices.
    Reply
  •  
    Sep 04 04:55 PM
    Check out BQI aka Oilsands Quest. Majorly undervalued and beaten by the shorts. One day it will come back like a beast.
    Reply
  •  
    Sep 04 09:50 PM
    With the barrel of oil going down, I would think the "tar sands" would cut back on their dividend payout. I still have a lot invested in Canadian Oil, and I belive we cannot cut ourselves off of it. I'm glad to see the U.S. manufactors trying to produce more fuel efficent cars for our needs, and oil will always be a major player in whatever we produce in the U.S..
    Reply
  •  
    Sep 05 08:56 AM
    Own the Canroys to play Canada, large divs, proven production and reserves etc. I have owned since they Oct 06 massacre when SIFT crap started. HTE, AAV, PWE, PGH, recently added PVX w debt paydown from US asset sales and also own in my IRA OGF.UN, Brompton's manulife-managed basket of these. So I lose a little on the 15% tax in the IRA, bot at 5.62 US in 1/08 and it's paying .07/month or .84 yr.

    Bottom line, these are safe country assets with low transportation costs to hungry US markets. SUV sales are up with gas down, it's fall, people will be driving etc.

    Canada is best play on oil. If these Canroys go down more or stay flat, will be take-over targets for sure by CN or US cos.
    Reply
  •  
    Sep 05 08:56 AM
    Own the Canroys to play Canada, large divs, proven production and reserves etc. I have owned since they Oct 06 massacre when SIFT crap started. HTE, AAV, PWE, PGH, recently added PVX w debt paydown from US asset sales and also own in my IRA OGF.UN, Brompton's manulife-managed basket of these. So I lose a little on the 15% tax in the IRA, bot at 5.62 US in 1/08 and it's paying .07/month or .84 yr.

    Bottom line, these are safe country assets with low transportation costs to hungry US markets. SUV sales are up with gas down, it's fall, people will be driving etc.

    Canada is best play on oil. If these Canroys go down more or stay flat, will be take-over targets for sure by CN or US cos.
    Reply
  •  
    Sep 05 08:56 AM
    I don't know why this site posts things twice! sorry!
    Reply
  •  
    Sep 05 01:02 PM
    New downside target: WTI@$93-95.

    Further economic woes, CHIJ, hurricane losses will drive GDP into negative territory in 3rd qtr. This means further Demand Destruction ergo lower oil.

    One thing to remember, International Sales may continue because of long lead times But International products and services are not priced in dollars overseas. Conversion to dollars will decimate these earnings. Lower commodity prices will hammer earnings in those sectors as well.

    The weakness in the previously strong and really only supporting sectors of the S&P earnings forecasts has not yet started to be factored into future prospects.

    See any more cockroaches? Open a few more lights.
    Reply
  •  
    Sep 05 01:03 PM
    listen to t. boone. "oil will be $200/bbl. at end of year" big new markets for oil and coal in china,india,etc. alternative energy a long way off and many road blocks.
    Reply
  •  
    Sep 06 03:26 PM
    Right now some of the best Canadians are not listed on the NYSE. Go to the TSX and pick up a Gallieon, a Prospect Ex, an Ithaca etc. NYSE are the big caps and like toomuchgas said 'fully priced" at todays levels.
    The others are undervalued even today based on future production gains.
    Reply
  •  
    Sep 30 02:05 AM
    By "Canroys" Beabaggage above meant Canadian Royalty Trusts, or Income Trusts, which throw off a lot of cash, and most can maintain their payments at current prices of less that $100/barrel. Beyond these cash machines, look carefully at TSX (Toronto's) Connacher (CLL-T) which is a rare oilsands producer that stays on time and under budget. If you want to stay home, Suncor (SU) may be temporarily beaten up enough by recent production issues to offer some additional value.
    Reply
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