Can you rank CNQ, SU and Toumaline in order of preference for overall returns? If owning only one which would be your choice? Is the recent pullback in prices a good opportunity to buy into the sector or should a person stay on the sidelines for a bit to see how the economy slows in the next half year? This is for a new account so no position yet. Income with some growth preferred. Please take credits as needed. Thank you! Great service.
We would be fine chipping away on the buy side of the energy sector right now while investors largely ignore the sector. Valuations are low, balance sheets are strong, and the sector will have economic leverage if conditions improve with lower rates. Right now everyone is concerned about China growth, but its problems should be temporary and it too is stimulating its economy. Financial strength in the sector is better than it has been in any cycle of the past 30 years at least. We would rank: CNQ, SU, TOU. While we like TOU a lot, the others have more diverse operations, and TOU is gas-focused. SU is the most integrated and perhaps less vulnerable to declines due to commodity prices. But we would be very comfortable owning any of these. If just one we would be mostly indifferent between CNQ and SU.