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Hemisphere Energy Corporation (HME)
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Imperial Oil Limited (IMO)
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Canadian Natural Resources Limited (CNQ)
Q: Morning 5i, thanks for the continued great info; we own IMO and CNQ; what's your opinion for a smaller co to join this group; ie: WCP or TOU ? Is there another you like instead ? Besides the need for the resource the higher yields should attract capital with rates trending down. Thank you.
5i Research Answer:
We think WCP and TOU could be complementary names for small-cap energy exposure. We prefer TOU due to its more aggressive capital return policy over the years. TOU is also focused on natural gas, which could make it a good complement to the oil-focused IMO/CNQ. In addition, for more aggressive investors, we also like HME, the company possesses a strong balance sheet and a decent record of growing dividends and special dividends. HME is trading at a cheap valuation relative to its oil peers. We think HME is an interesting, under-the-radar oil name. However, the company is quite small, with limited trading volume, which investors need to be aware of.