Q: My Suncor holdings have grown nicely since I bought during Covid and enjoyed the rise where we currently match the 2018 highs.
BUT: what would drive further growth for SU share price? I am not looking to hold for dividend only. To me there are headwinds of increased regulatory hurdles, inability to get access to new large pipelines and the socially dim view of anything "oil". Thoughts? Any better bets on energy?
Thanks! And may your day be bright!
BUT: what would drive further growth for SU share price? I am not looking to hold for dividend only. To me there are headwinds of increased regulatory hurdles, inability to get access to new large pipelines and the socially dim view of anything "oil". Thoughts? Any better bets on energy?
Thanks! And may your day be bright!
5i Research Answer:
Most of these 'issues' have been around a while already and still SU has done well. It generates excess cash flow, which can be used to pay dividends, reduce debt and do share buybacks. All of these can increase its valuation over time. It could do acquisitions as well to boost growth. But generally, it has performed well in a cyclical industry, and we think the industry will stay cyclical. Oil is not going away any time soon, and even in a negative industry scenario, its intergrated operations and diversity of operations simply become more scarce. TOU is interesting in the sector as it is gas focused, but for an intergrated Canadian company we would certainly be fine holding SU for a multitude of years.