Q: With energy stocks lower due to this trade war, would this be a good time to look at getting into this sector assuming it would be through an energy ETF? If so, do you have a few names that trade in Canada that provide a decent return, and some safety through a lower payout ratio? Thanks for your insight.
5i Research Answer:
The sector has been weak on economic, OPEC supply and other concerns. But currently the sector is very cheap but also fundamentally strong. Versus other cycles, balance sheets are in very good shape and dividends are high. Most companies are doing share buybacks with their free cash flow. We would suggest XEG, or NNRG if an investor wanted to be a bit more aggressive. Both are down with the sector this year. NNRG has a much lower yield reflecting its more-aggressive stock positioning.