nergy Stocks Remain A Buy Despite Strong Performances In The Last Month
Jun. 06, 2020 12:30 AM ETBTE, CPG, CVE...24 Com
https://www.google.com/amp/s/seekingalpha.com/amp/article/4352291-energy-stocks-remain-buy-despite-strong-performances-in-last-month/it's very difficult to buy something that keeps going up, but a broader perspective is needed in light of the strong recent performance.
Energy stock prices have only just recovered back to the "price war narrative" level.
Names we track are still trading at very high free cash flow yields assuming $57/bbl WTI.
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Welcome to the valuation edition of Oil Markets Daily!
It's very difficult to buy something that keeps going up, but a broader perspective is needed in light of the strong recent performance.
Take Cenovus Energy (NYSE:CVE) for example, it has returned 187% since we bought it in March, but despite these gains, it is still down ~50% from where it was last year.
And in our mind, the recent price performance is simply correcting a material narrative shift since March.
Rewinding back to March, Saudi had just declared an oil price war following a botched OPEC+ meeting. The sudden and dramatic gap lower in energy names came as investors fretted over the coronavirus demand destruction, but also the destruction of the energy market narrative that Saudi will be the responsible producer.
Practically everyone sold and turned into a bear causing some of these energy stocks to trade to a valuation tantamount to bankruptcy. In March, the valuations got so out of whack that even solvent durable producers like Suncor (NYSE:SU) traded to a valuation of ~25% FCF yield. The very same Cenovus, which didn't have any debt due in the next three years, traded to a valuation of 100% FCF yield. Meg Energy (OTCPK:MEGEF) traded above 100% FCF yield to ~140% at the very bottom.../
I concur
With economies opening up, v shape recovery maybe ahead, think energy still maybe at reasonable prices.. companies and folks gettingback to normal swings of things. More energy probably be in demands
Also think buying USA and Canada pipelines /energy
Long VDE
