Michael Sprung Top Stock Picks Canada on BNN’s Market Call, June 7, 2017

Contrary to the negative views expressed by the media, US investors have continued to embrace the policies of the Trump administration as evidenced by the markets advance. This enthusiasm has been most evident in the larger capitalized companies that would stand to benefit the most from lesser regulation and lower taxes. The Canadian markets have been less robust despite some positive economic indications that the Canadian economy has exhibited some positive growth of late in GDP that has been greater than that of the US. A lot of the Canadian media has caused concerns over the housing situation in Vancouver and Toronto as well as speculating on the uncertainties in renegotiating the NAFTA agreement. The European economies have also exhibited some positive trends despite some political disruptions, as have a number of the Asian economies.

Michael Sprung, Top Picks, Scotiabank, Canadian Natural, Hudbay Minerals

Michael Sprung's Top Picks: Scotiabank, Canadian Natural, Hudbay Minerals

The markets have generally been in an uptrend since the financial crisis ten years ago. Valuations are stretched but positive earnings surprises have kept the trend intact for the time being. It has been a slow, tepid cyclical recovery that is often typical following a financial crisis. A wane in investors' confidence over the Trump administration's ability to deliver its agenda could have a negative impact on current valuations.

Politics and economic cycles are often out of sync. The politics of populism are not as accommodating to the concepts of free trade and globalization that have sown the seeds of the current recovery, yet those very politicians may point to the recovery and take credit where none is due. In fact, they may sow the seeds of the next downturn. However, economic forces tend to prevail over the longer term and investors should be prepared to take advantage of dislocations in the interim.


Top Stock Picks Canada.


Bank of Nova Scotia, BNS-T, Owned personally and by clients. Last purchase Sept. 16, 2016 $69.85

The Bank of Nova Scotia is the most international of the Canadian banks with branches in the Caribbean, Central and South America. In the most recent quarter, record Global Banking and Capital Markets earnings reflected the benefits of management's investments in operational efficiencies and technology over the last few years. BNS has one of the strongest capital bases of the large banks. The stock currently yields 4.0%.

Canadian Natural Resources Ltd., CNQ-T, Owned by clients, Last   Purchase August 26,2015 $25.54

Canadian Natural resources is one of Canada's leading senior producers of oil and gas. CNQ is one of the best managed and best capitalized companies in the energy sector. As such, CNQ has weathered the seismic swings in energy prices and has been in a position to take advantage of opportunities. The recent purchase of a large working interest in the Athabasca Oil Sands Project will decrease the overall production decline rate and add to earnings. The dividend yield is 2.8%.

HudBay Minerals Inc., HBM-T, Owned personally and by clients, Last purchase April 7, 2016 $4.24

HudBay Minerals is one of Canada's leading producers of zinc, copper and precious metals with operations in Canada, Peru and the US. Constancia has made progress addressing some equipment issues. The expected ramp up of base metal production at Lalor with a mine plan for the gold zone resources and permitting later in the year for Rosemont will provide positive catalysts going forward.

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The opinions expressed here are ours alone. They are provided for information purposes only and are not tailored to the needs of any particular individual or company, are not an endorsement, recommendation, or sponsorship of any entity or security, and do not constitute investment advice. We strongly recommend that you seek advice from a qualified investment advisor before making any investment decision.  

Canadian Natural Resources Limited (TSE:CNQ) reports strong growth in Q4 profit

Crude oil and natural gas producer Canadian Natural Resources Limited (TSE:CNQ, Mkt cap 47.84B, Div/yield 0.28/2.64, EPS -0.19, Shares 1.11B) has reported encouraging results for the final quarter of 2016, with net earnings rising to $566m compared with $131m a year earlier.

Net income per share was 51 cents, up from 12 cents per share in the fourth quarter of 2015.

For the full year, the company made a net loss of $204m, a considerable improvement from the previous year's net loss of $637m.

Canadian Natural Resources TSE:CNQ strong growth Q4 profitCanadian Natural also announced an increase in its quarterly dividend from 25 cents to 27.5 cents per share, which is payable on April 1.

Steve Laut, president of Canadian Natural, said in a statement: "2016 was a milestone year for Canadian Natural with the continued transition to a long life low-decline asset base with the strong execution and operational results of Horizon Phase 2B. In the fourth quarter of 2016 the company achieved record SCO production of 178,000 bbl/d and record low operating costs of $22.53 were realized as cost efficiencies continue to be a focus.

"Production levels at Horizon continue to be in excess of our 182,000 bbl/d nameplate capacity with December, January and February production averaging approximately 184,000 bbl/d, 195,000 bbl/d and 202,600 bbl/d respectively. Strong production combined with record low operating costs is delivering substantial cash flow generation and as a result our balance sheet is strengthening quickly. This will allow for greater returns to shareholders, as demonstrated by today's 10% dividend increase, economic development of our asset base and potential for opportunistic acquisitions."

In the coming year, Canadian Natural is looking to deliver 6% production growth with a $3.9bn capital program, Laut said.

"With approximately $1.05bn of Horizon Phase 3 expansion capital remaining to be spent in 2017 as a part of this capital program, an additional 80,000 bbl/d of SCO will be added at Horizon," he explained.

Phase 3 of the Horizon oil sands project is expected to start operating in the fourth quarter of 2017.

Canadian Natural Resources Limited (TSE:CNQ) is an independent crude oil and natural gas exploration, development and production company. The Company is engaged in the acquisition, exploration, development, production, marketing and sale of crude oil, natural gas and natural gas liquids (NGLs). Its exploration and production operations are focused in North America, largely in Western Canada; the United Kingdom (UK) portion of the North Sea and Cote d'Ivoire, Gabon, and South Africa in Offshore Africa. The Horizon Oil Sands Mining and Upgrading segment (Horizon) produces synthetic crude oil through bitumen mining and upgrading operations. Within Western Canada, the Company maintains certain midstream activities that include pipeline operations, an electricity co-generation system and an investment in the North West Redwater Partnership (Redwater Partnership), a general partnership formed in the Province of Alberta. More from Reuters »

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The opinions expressed here are ours alone. They are provided for information purposes only and are not tailored to the needs of any particular individual or company, are not an endorsement, recommendation, or sponsorship of any entity or security, and do not constitute investment advice. We strongly recommend that you seek advice from a qualified investment advisor before making any investment decision.  

TSE-CNQ – Acquisitions make Canadian Natural Resources Canada’s top natural gas producer

Canadian Natural Resources Limited (TSE-CNQ, Mkt cap 45.18B, P/E – , Div/yield 0.23/2.23, EPS -0.45, Shares 1.10B) has become the largest natural gas producer in Canada following its acquisition of about 12,000 natural gas wells in Alberta over the last two years, Reuters reported on Monday.

According to the news agency’s analysis of regulatory data, the counter-cyclical purchases have allowed CNRL to expand its business while rival operators sold assets or maintained a steady well count.

Thanks to the recently acquired wells, the company’s North American natural gas production increased by 9% in 2015, following a 35% rise the prior year. The expanded well count also gives the company a strategic advantage that will pay off in future years if the natural gas market improves, Reuters pointed out.

TSE-CNQ - Acquisition Canadian Natural Resources Canada top natural gas producer

TSE-CNQ – Acquisitions make Canadian Natural Resources Canada’s top natural gas producer

“All these new wells have low production, but they were bought for pennies for the dollar,” commented Chris Cox, analyst with financial services firm Ramond James. He went on to note that the wells are located in adjacent properties, offering cost synergies, and “if you are expecting pricing to improve then you get an additional uplift.”

CNRL president Steve Laut told Reuters that the company had pursued a strategy of purchasing wells across Alberta and British Columbia as they came up for sale in areas where it already operates.

“Western Canada over time has become a very high cost basin and so it’s difficult to compete especially when commodity prices go down,” Laut explained. “All industry … have to find ways to become more effective and more efficient.”

CNRL had an ownership stake in 27,968 producing natural gas wells in Alberta at the end of 2015, up 27% from a year earlier. In 2014 its well count increased by 69%. These gains resulted from acquisitions, not exploration, Reuters found.

Data filed with the Alberta Energy Regulator shows that in the 12 months from June 2015 to May 2016, CNRL became the license holder for about 3,960 producing natural gas wells. In the previous 12 months it took over around 8,290 wells — compared to only about 620 wells between June 2013 and May 2014.

In total, CNRL had a stake in 53,868 oil or gas wells in Alberta at the end of 2015, a 60% increase from two years earlier.

Canadian Natural Resources Limited is an independent crude oil and natural gas exploration, development and production company. The Company is engaged in the acquisition, exploration, development, production, marketing and sale of crude oil, natural gas and natural gas liquids (NGLs). Its exploration and production operations are focused in North America, largely in Western Canada; the United Kingdom (UK) portion of the North Sea and Cote d’Ivoire, Gabon, and South Africa in Offshore Africa. The Horizon Oil Sands Mining and Upgrading segment (Horizon) produces synthetic crude oil through bitumen mining and upgrading operations. Within Western Canada, the Company maintains certain midstream activities that include pipeline operations, an electricity co-generation system and an investment in the North West Redwater Partnership (Redwater Partnership), a general partnership formed in the Province of Alberta. More from Reuters » 

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We believe clients are more concerned about losing money than making speculative gains. Like to learn more? Please contact us here>>

The opinions expressed here are ours alone. They are provided for information purposes only and are not tailored to the needs of any particular individual or company, are not an endorsement, recommendation, or sponsorship of any entity or security, and do not constitute investment advice. We strongly recommend that you seek advice from a qualified investment advisor before making any investment decision.

BNN Market Call Interview: Market Outlook and Top Picks

Market Call Outlook

Investors’ concerns have been evident as the volatility of the global markets has increased over the recent past. Those concerns have been exacerbated by intense coverage by the media of the many global calamities that are ongoing. New shocks to the market have appeared as investors’ attention is shifted between the ongoing debt problems in the European Union, mass emigration from unstable regimes in the Middle East across the Mediterranean, the sudden decline in the Chinese market with implications of a slowing domestic economy, ongoing fears of Russian hegemony in the Ukraine, territorial conflicts in the South China Sea, etc. Nearer to home, the Canadian economy continues to adjust to the impact of fallen commodity prices, particularly energy, and the subsequent ripple effects throughout the economy. Investors have also been captivated by trepidation and uncertainty as to the effect that a raise in interest rates may have on the currently more robust US economy, when and if such a rate hike occurs.

Given that until recently, the markets have exhibited little sign a correction since the financial crisis of 2008, we believe that the current volatility is a natural outcome of wavering economic conditions in conjunction with the unsettling geopolitical issues. Arguably, valuations had become a little rich and we are now going through an adjustment that is a natural phenominom of market cycles. These adjustments are rarely smooth or quick.

It is during these periods that investors should be seeking opportunities in companies that ultimately benefit from the calamity caused by current conditions and in fact prosper from their ability to take advantage of their weakened competitors.

Michael Sprung Interviewed by Mark Bunting on BNN

Market Call Top Picks

Bank of Nova Scotia

The Bank of Nova Scotia (TSE:BNS, Mkt cap 71.13B, P/E 11.07, Div/yield 0.70/4.75, EPS 5.32, Shares1.21B) is the most international of the Canadian banks with branches in the Caribbean, Central and South America. The Canadian banks have been impacted by the recent volatility in the markets. BNS is now selling at levels that long term investors should find attractive as the premium valuation has fallen. The dividend yield is now 4.7%.

Canadian Natural Resources

Canadian Natural Resources Limited (TSE:CNQ, Mkt cap 31.26B, P/E 19.85, Div/yield 0.23/3.22, EPS 1.44, Shares 1.09B) is one of Canada’s leading senior producers of oil and gas. In the current environment, investors should be positioning their exposure in the energy sector to the stronger, better managed firms that have the wherewithal to survive through the downturn and take advantage as weaker companies are forced to dispose of assets or sell at bargain prices. CNQ has an enviable balance sheet and extremely well regarded management. The recent falloff of the stock price presents a good place to establish an initial position in this company.

HudBay Minerals Inc.

HudBay Minerals Inc.(TSE:HBM, Mkt cap 1.49B, P/E 52.67, Div/yield 0.01/0.32, EPS 0.12, Shares 235.23M) is one of Canada’s leading producers of zinc, copper and precious metals with operations in Canada, Peru and the US. Constancia, a major copper-molybdenum-silver mine in Peru, will be is currently ramping up production. HudBay has a number of projects coming on stream over the next few years, we anticipate that valuation levels will increase.

What is Successful Investing? Learn more here>>

Download Our Free Special Report – How to Hunt For Value Stocks. Michael Sprung will share with you 5 stocks set for long-term gains here>>

We believe that clients gain from our focus on the long-term fundamentals and not chasing short-term trends. Like to learn more? Please contact us here>>

The opinions expressed here are ours alone. They are provided for information purposes only and are not tailored to the needs of any particular individual or company, are not an endorsement, recommendation, or sponsorship of any entity or security, and do not constitute investment advice. We strongly recommend that you seek advice from a qualified investment advisor before making any investment decision.

 

Michael Sprung on BNN Market Call, Jan. 7, 2015

Top Picks:

Manulife Financial Corp, Owned Personally and by Clients, Last Purchase December 18, 2014, $21.95

Manulife Financial Corp. (TSE:MFC, Mkt cap 40.04B, P/E 10.01, Div/yield 0.16/2.89, EPS 2.15, Shares 1.86B) is a leading Canadian-based financial services group with operations in Asia, Canada and the United States.  Over the past five years, the company has made tremendous strides in de-risking the balance sheet and improving profitability through increasing wealth management operations as well as redirecting the mix of products sold.  The insurance companies will be amongst the beneficiaries should interest rates start to rise.  MFC has one of the strongest capital bases in the industry.  The recent purchase of New York Life's Retirement Plan Services business while exchanging a part of a portfolio of John Hancock's  life insurance is positive and reinforces the shift into ongoing service areas.

michael sprung bnn market call
Canadian Natural Resources Limited, Owned by Clients, Last Purchase December 18 2014 $35.03

Canadian Natural Resources Limited (TSE:CNQ, Mkt cap 36.01B, P/E 11.53, Div/yield 0.22/2.73, EPS 2.86, Shares 1.09B) is one of Canada's leading senior producers of oil and gas.  In the current environment, investors should be positioning their exposure in the energy sector to the stronger, better managed firms that have the wherewithal to survive through the downturn and take advantage as weaker companies are forced to dispose of assets or sell at bargain prices.  CNQ has an enviable balance sheet and extremely well regarded management.  The recent falloff of the stock price presents a good place to establish an initial position in this company.


New Flyer Industries, Owned by Clients, Last Purchase December 18, 2014, $12.80

New Flyer Industries Inc (TSE:NFI, Mkt cap 729.35M, P/E 20.02, Div/yield 0.049/4.43, EPS 0.66, Shares 55.51B) manufactures and assembles transit buses in Canada and the US as well as providing after market services.  Third quarter results were effected by fewer deliveries as a result of delays in  inspections.  The company has been a consolidator in North America and is well positioned to participate in fleet renewals.  New Flyer will be a beneficiary of the improving economy in the US and the strong US dollar as about 80% of their revenues stem from the US

Outlook


Investors in Canada have been focused on the turbulence in the energy sector since November and continues in the new year.  Canadian markets are not alone in experiencing pressure in stocks and commodity prices while markets in the US have gone in the opposite direction as that economy continues to exhibit healthier expansion characteristics.  We anticipate that volatility will increase as the geopolitical and economic concerns in Europe and Asia continue to weigh on market sentiment.  In 2015, global trade and environmental negotiations will also factor into market sentiment.  This environment should provide value investors with good opportunities to identify reasonably priced securities and re-balance their portfolios to grow over the next business cycle.

You can view Mark Bunting's complete interview with Michael Sprung on BNN's Market Call here>>

Download Our Free Special Report – How to Hunt For Value Stocks. Michael Sprung will share with you 5 stocks set for long-term gains.

We believe that investment management is about managing risk, not chasing speculative returns.

Like to learn more? Please contact us here>>


The opinions expressed here are ours alone. They are provided for information purposes only and are not tailored to the needs of any particular individual or company, are not an endorsement, recommendation, or sponsorship of any entity or security, and do not constitute investment advice. We strongly recommend that you seek advice from a qualified investment advisor before making any investment decision.