Michael Sprung’s Outlook and Top Picks on BNN Bloomberg’s Market Call

Outlook:

Trade issues continue to cloud the economic outlook as the tariffs constrain spending and companies seek alternative supply routes in their attempts to minimize the higher costs resulting from the implemetation of the tariffs. Geopolitical issues are contributing to the growing uncertainty as we face federal elections year in Canada and the US, turmoil in the UK with respect to Brexit and increasing tensions the Asia (Hong Kong) and the Middle East.

trad issues cloud economic outlook

Trade issues continue to cloud the economic outlook

As the global outlook for economic growth diminishes, investors are reacting to the slightest pronouncements by central bankers as evidenced by the increasing volatility in the markets.

We suggest that investors continue to take a very cautious stance, investing in strong companies with solid balance sheets and management.

Top Picks:

Canadian Imperial Bank of Commerce, CM-T, Owned personally and by clients, Last Purchase: August 2019, $99.92
CM is Canada’s fifth largest bank by market capitalization. Over the better part of the past decade, management has concentrated on de-risking and shoring up the balance sheet largely by retrenching and focusing on core competencies. The bank is consistently among the most profitable as measured by return on equity and with a strong capital base. Today the valuation is attractive and the yield is 5.6%.

Suncor Energy Inc., SU-T, Owned personally and by clients, Last Purchase August 2019, $37.26
Suncor is Canada’s largest integrated energy company. The company has an extremely strong upstream asset base and the top downstream business in North America. Suncor is the most profitable Canadian refiner. The company generates very strong free cash flow, higher than its Canadian and global peers. Ongoing stock repurchases and dividends will return capital to shareholders. At current levels, the stock yields 4.3%.

BCE Inc., BCE-T, Owned personally and by clients, Last Purchase February 2018, $56.22
BCE Inc. is Canada’s largest communications company. The company’s dominant infrastructure build provides some competitive advantage over its primary competitors. However, changes in technology and the competitive landscape will require large ongoing capital outlays. In the wireline business, BCE is leading in its quest to bring fibre to the home that will provide superior internet and related services. The wireless busines remains competitive promotions are expected to continue but BCE retains the largest market share. The media business remains challenging. In the current environment, we antcipate that BCE will more than hold its own position in the competitive landscape and the current yield of 5.0% is attractive given the likelyhood of future dividend increases.

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.

BNN Bloomberg Market Call – Michael Sprung’s Top Picks and Outlook, October 24, 2018

Outlook:

After nine and a half years of expansion since the financial crisis of 2008, expectations of continuing synchronized expansion have begun to diminish. While the developed economies continue to exhibit progress, those in the emerging markets have begun to falter. Countries with high debt levels are being negatively impacted as central banks tighten monetary conditions through higher interest rates. Given the availability of low rate debt, consumers and governments in the more developed countries will also begin to feel the pinch of higher rates

Michael Sprung Top Picks Outlook BNN Bloomberg Market Call

Michael Sprung’s Top Picks and Outlook on BNN Bloomberg Market Call

.

In addition, trade tensions and tariff disputes are contributing to the uncertain economic environment.

Up to this point, the US market has been the leading global market with strong employment, positive economic growth and growing corporate earnings on the back continued consumer demand and last year’s tax cuts. Given the level of accumulated debt and the rapidly increasing federal deficit resulting in large part from those very tax cuts, the momentum of the past year will not likely be sustained.

In this environment, we recommend caution.

Top Picks:

Suncor Energy Inc., SU-T, owned personally and by clients, Last Purchase March 2016, $32.91

Suncor is Canada’s largest integrated energy company. The company has an extremely strong upstream asset base and the top downstream business in North America. Suncor is the most profitable Canadian refiner. Recent strengthening in crack spreads has resulted from low feedstock costs and more stable product pricing. The company generates very strong free cash flow, higher than its Canadian and global peers. Ongoing stock repurchases and dividends will return capital to shareholders. Despite these factors, the share price has lagged providing an opportunity for investors.

Hudbay Minerals Inc., HBM-T, Owned personally and by clients, Last Purchase September 8 2017, $9.41

Hudbay provides investors with strong leverage to copper and zinc, both of which have strong longer term supply/demand fundamentals. Hudbay’s flagship copper mine Constancia is performing well and expectations are Pampacancha will start contributing in 2019. Growth in the next few years will stem from expanded copper, zinc and precious metal production. Gold production is anticipated to improve at Lalor. Rosemont permitting continues with construction anticipated 2019 to 2021. Surface rights for Pampacancha are expected within the next six months. At current levels, HBM is selling at a significant discount to its peers. Recent investor activism (Waterton Global Resource Management Inc.) may bring more attention to this stock.

New Flyer Group Inc., NFI-T, Owned by clients, Last Purchase June 16, 2015, $15.22

NFI Group is North America’s leading manufacturer of transit buses and motor coaches, and the leading distributor of aftermarket parts. Since taking some profits in March 2018 at $58.60, the share price has retreated to where it is attractive to investors. The share price decline may have been indicative of some expansion in industry capacity as well as perceptions that customers may be more constrained going forward. However, deliveries and backlog remain firm and at current prices, the shares are attractive.

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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.

 

Top Stock Picks 2017 – Michael Sprung on BNN’s Market Call – April 28th, 2017

Top Stock Picks 2017 Outlook
 

As we look back at the first 100 days of the Trump administration, we see a period filled with conflicting messages. The media has been prolific in their condemnation of Trump's policies but the capital markets have been more sanguine.  Sine the election in November, the US markets have enthusiastically embrace the promises of deregulation and lower taxes that were the cornerstones of the Trump campaign. The enthusiasm paused briefly when changes to health care met with resistance and investors realized that not all of the promises are likely to be easily forthcoming. The Canadian markets were not as robust. Weak energy prices and tepid economic growth were reflected in more range bound markets. European markets were a bit more robust as factories exhibited greater activity as was the case in much of Asia as exports from Taiwan, South Korea and China were up from a year ago.

Michael Sprung Top Picks BNN Market Call April 28 2017

Michael Sprung's Top Picks BNN Market Call: April 28, 2017

There is certainly reasons to be optimistic on the global economy as orders for capital equipment are on the rise and employment improves. It has been a long, hard climb out of the financial abyss of ten years ago as is often the case in financial crisis. The difficulty of the recovery has been reflected in large part in the rise of populist politics as evidenced by the Brexit vote and the election of Donald Trump. Europe faces a few key elections this year.

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.

We Canadians are very aware of these factors as we gear up for renegotiating the NAFTA agreement.

 

Top Stock Picks 2017


Canadian Imperial Bank of Commerce, CM-T, Owned by clients and personally, Last Purchase Sept 16, 2016 $101.00

CM is Canada's fifth largest bank by market capitalization. Over the better part of the past decade, management has concentrated on de-risking and shoring up the balance sheet largely by retrenching and focusing on core competencies. The bank is now the most profitable as measured by return on equity and has one of the strongest capital bases. The recent purchase of PrivateBancorp  establishes CM with a larger foothold in US. This is a well run, well managed bank and CM has paid a premium to make this purchase. Most recently, the share price has pulled back as concerns about the Canadian mortgage market have been in the spotlight. At current prices, the bank yields around 4.6%.

Suncor Energy, SU-T, Owned by clients, Last purchase March 2, 2016 $32.94

Suncor is Canada's largest integrated oil and gas company. Suncor has a strong production base with quality long-term assets, a strong balance sheet, and an integrated business model smoothing to some extent the cash flow from the various business segments. Management has been focused of increasing efficiencies and positioning the company for future growth. Over the remainder of the year, Fort Hills and Hebron will be coming online. Suncor has a strong balance sheet to support and expand operations. At current levels, the stock yields 3.1%.

Goldcorp, G-T, Owned by clients, Last Purchase March 30, 2017 $19.43

Goldcorp is one of North America's largest gold companies that  now beginning to reap the rewards of major capital spending over the past few years as Penasquito is in production. Joint ventures with Barrick and Teck Resources will assist in driving costs down over the next few years as management begins to prepare for future growth in Arizona and Chile.

You can view the complete Market Call interview here>>

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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.  

Suncor Energy (TSE:SU) to work with regulator after tailings pond plan is turned down

Canadian energy company Suncor Energy Inc (TSE:SU, Mkt cap 68.61B, Div/yield 0.32/3.11, EPS 0.25, Shares 1.67B) has pledged to work with the Alberta Energy Regulator (AER) after its oilsands tailings pond retirement plan was rejected.

Suncor energy tailings pond plan

Suncor Energy (TSE:SU) to work with regulator after tailings pond plan is turned down.

The application, which was submitted in April 2016, is a requirement under the Government of Alberta's Tailings Management Framework.

The regulator announced on Friday that the company's fluid tailings management proposal for its northern Alberta facilities did not satisfy regulatory requirements and it must submit a new plan.

Suncor had proposed to treat about 75% of its fluid tailings in a new dedicated disposal area using in-line flocculation followed by water-capping. However, in a four-page letter explaining its decision, the AER said that the company did not provide enough information about the associated risks, benefits and trade-offs.

This means that the regulator cannot properly assess whether the water-capping technology will result in an aquatic ecosystem in the time predicted.

Where unproven technology is proposed, applicants must consider alternatives. But the AER again said that Suncor did not provide "adequate information". Similarly, not enough evidence was provided with regard to its "ready to reclaim" criteria, which are expected to address a deposit's physical properties and environmental effects.

New rules introduced by the AER last year require all tailings ponds to be removed within 10 years of the end of a mine's life, according to the Canadian Press.

Suncor said that it will continue to work with the regulator "in order to move the regulatory process forward".

Suncor Energy Inc. (TSE:SU) is a Calgary, Alberta based integrated energy company. The Company is focused on developing Canada’s petroleum resource basin, Athabasca oil sands. The Company operates in three business segments: Oil Sands, Exploration and Production, and Refining and Marketing. The Company’s Oil Sands segment includes Oil Sands operations and Oil Sands ventures operations. Its Exploration and Production segment consists of offshore operations off the east coast of Canada and in the North Sea, and onshore assets in North America, Libya and Syria. The Company’s Refining and Marketing segment is engaged in Refining and Supply, and Downstream Marketing. In addition, the Company explores, for, acquires, develops, produces and markets crude oil and natural gas in Canada and internationally. The Company also transports and refines crude oil, and markets petroleum and petrochemical products primarily in Canada. 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.

 

Teck Resources (TSE:TECK.B) and Suncor Energy (TSE:SU) raise cost estimate for Fort Hills oil sands project

Teck Resources Ltd (TSE:TECK.B) and Suncor Energy Inc (TSE:SU) have increased the cost estimate for their Fort Hills oil sands project.

Following a review of the schedule, project costs and throughput, Suncor, operator of the Fort Hills Energy Limited Partnership, which owns the project, stated that the overall cost of the project is now estimated to be between $16.5bn and $17.0bn, or about 10% more than forecast.

Teck TSE:TECK.B Suncor TSE:SU cost estimate Fort Hills oil sands project

Teck Resources (TSE:TECK.B) and Suncor Energy (TSE:SU) raise cost estimate for Fort Hills oil sands project

Teck Resources (TSE:TECK.B) and Suncor Energy (TSE:SU) raise cost estimate for Fort Hills oil sands project[/caption]While most of the project is progressing in line with the original plan and budget, last year's wildfires in Fort McMurray and construction changes have increased the capital cost estimate for the secondary extraction facility.

The project, located in the Athabasca oil sands region of northeastern Alberta, was more than 76% complete at the end of the fourth quarter of 2016, with two of the six major project areas (mining and infrastructure) turned over to operations. All major plant equipment and materials are now on site, and all major vessels and process modules have been installed. Shovels, trucks and equipment are mobilizing for operations.

According to Teck, the project remains on track to produce first oil in late 2017.

The cost per flowing barrel of bitumen is expected to remain at about $84,000 because nameplate capacity has been increased to 194,000 barrels per day (bpd) from 180,000 bpd.

Suncor holds a 50.8% interest in the Fort Hills Energy Limited Partnership, with 29.2% held by Total E&P Canada Limited and a 20% interest held by Teck.

Suncor's share of Fort Hills' remaining project capital cost is between $1.6bn and $1.8bn, the majority of which will be spent in 2017. Teck's share of project capital costs through to completion is now expected to be $805m, of which approximately $640m will be spent this year.

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We believe that successful investors focus on the quality of the assets they buy. Speculators focus on guessing the future prices. 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.  

Oil Pipelines – Canadian Government approves two major pipeline projects

Oil Pipelines Canadian Government approved

Oil Pipelines – the Canadian Government has approved two major crude oil pipeline projects and rejected a third.

The Canadian Government has approved two major crude oil pipeline projects and rejected a third.
Minister of Natural Resources, Jim Carr, and Minister of Transport, Marc Garneau, announced on Tuesday that Kinder Morgan’s C$6.8bn Trans Mountain Expansion Project had been given the green light, subject to 157 conditions.

The Government has also approved Enbridge‘s Line 3 Replacement Project, subject to 37 conditions. Enbridge is planning to replace 1,067 km of existing pipeline from Hardisty, Alberta, to Gretna, Manitoba, to enhance the safety of the line and restore its original capacity of 760,000 barrels a day.

But another Enbridge project, the long-stalled Northern Gateway pipeline, will not proceed because it would result in crude oil tankers transiting through the sensitive ecosystem of the Douglas Channel, part of the Great Bear Rainforest, the Government said.

Enbridge welcomed the approval of the Line 3 replacement program, the largest project in its history at approximately C$7.5bn.

“We have strong support for the project from our communities along the route, including Indigenous communities,” the company said in a statement.

Commenting on the rejected Northern Gateway pipeline, the company expressed disappointment with the decision and said it was an important project to ensure Canada gets its resources to international markets.

“Northern Gateway also represented an unprecedented partnership with Indigenous people,” Enbridge continued. “The 31 Indigenous communities who had a one-third ownership in Northern Gateway stood to realize C$2bn in benefits to their communities and would have played an important stewardship role in the project.”

The Government also announced a moratorium on crude oil tankers along British Columbia’s northern coast.

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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 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.

 

Wood Group helps Suncor Energy (TSE:SU) cut well pad costs

Suncor Energy Inc (TSE:SU, Mkt cap 60.94B, Div/yield 0.29/3.15, EPS -1.95, Shares 1.66B) has awarded a three-year contract to Wood Group for its cost-saving heavy oil well pad design.

Suncor Energy Wood Group Firebag

Wood Group helps Suncor Energy (TSE:SU) cut well pad costs

Wood Group said on Tuesday that its standard well pad design reduces Suncor’s well pad costs by at least 50%.

The Scottish-based company has received the first authorization under a recently signed multi-use agreement with Suncor Energy, for work to be completed at its Firebag site in Alberta, Canada, approximately 120 km northeast of Fort McMurray.

Wood Group developed its standard well pad design in response to growing concerns about escalating costs for in-situ heavy oil facilities, especially steam-assisted gravity drainage (SAGD) well pads. It uses the same design-one, build-many approach that Wood Group has applied successfully to other heavy oil and offshore facilities, the company explained.

The design delivers cost savings by eliminating much of the operator’s costs associated with engineering, procurement and project management. The design accommodates pad sizes of up to 12 well pairs and uses a drilling pattern with the production and steam injection wells in two parallel rows, and wells drilled at 10-meter spacing.

Robin Watson, chief executive of Wood Group, said in a statement: “Our standard well pad design provides heavy oil producers the opportunity to lower costs and increase profit margins, and offers a new design solution for heavy oil production.”

Over the life of a SAGD project, approximately two-thirds of all capital spending is on well pads and gathering line infrastructure. Suncor’s well pad facilities costs, which previously ranged from more than C$4m to C$9m per well pair, are now approximately C$2m per well pair using the Wood Group design.

Suncor Energy Inc. (TSE:SU) is a Calgary, Alberta based integrated energy company. The Company is focused on developing Canada’s petroleum resource basin, Athabasca oil sands. The Company operates in three business segments: Oil Sands, Exploration and Production, and Refining and Marketing. The Company’s Oil Sands segment includes Oil Sands operations and Oil Sands ventures operations. Its Exploration and Production segment consists of offshore operations off the east coast of Canada and in the North Sea, and onshore assets in North America, Libya and Syria. The Company’s Refining and Marketing segment is engaged in Refining and Supply, and Downstream Marketing. In addition, the Company explores, for, acquires, develops, produces and markets crude oil and natural gas in Canada and internationally. The Company also transports and refines crude oil, and markets petroleum and petrochemical products primarily in Canada. More from Reuters »

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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.

 

TSE:SU Suncor raises $2.5-billion, cuts production guidance after wildfires

Suncor Energy Inc. (TSE:SU, Mkt cap 57.47B, P/E – , Div/yield 0.29/3.25, EPS -0.98, Shares 1.58B) signed a $2.5-billion bought deal for the sale of 71.5 million shares at $35 a share, which represents a discount of $1.50, or 4.1 per cent, to Tuesday’s closing price of $36.50. The Calgary-based company also lowered its production estimates after wildfires across northern Alberta forced the company to shut down facilities.

TSE:SU Suncor raises $2.5-billion

Suncor Energy Centre – TSE:SU Suncor raises $2.5-billion, cuts production guidance after wildfires

As a result of the fires in the Regional Municipality of Wood Buffalo (RMWB), Suncor said that its annualized total upstream production is now estimated to be between 585,000 and 620,000 barrels per day (bbls/d), with synthetic crude oil sales of 265,000 to 275,000 bbls/d, exported bitumen of 100,000 to 120,000 bbls/d and Syncrude production of 105,000 to 115,000 bbls/d.

Based on actual asset performance to date, production guidance for Exploration and Production has been increased to between 105,000 and 110,000 bbls/d.

Suncor expects that its incremental costs incurred to respond to the fires will be more than offset by variable cost savings during the outage.

The company’s cash operating costs are anticipated to remain within guidance of C$27-C$30 per barrel for the full year, while Syncrude cash operating costs are now estimated to be C$41-C$44 per barrel for the full year based on the operator’s estimates of restart timing and production ramp up.

Suncor is in the process of ramping up production and all of its operations in RMWB are expected to be producing at normal rates by the end of June. Syncrude anticipates a return to production starting in late June, followed by a full ramp up of production by mid-July.

The fires caused no damage to Suncor’s facilities or assets, and the company said that “enhanced fire mitigation work” has been conducted at all sites to reduce any future potential threat.

“Throughout this unprecedented situation, the community has demonstrated incredible resilience, patience and commitment to each other and the industry,” commented Suncor president and CEO Steve Williams. “As a result of working with government and the region we safely returned thousands of people and restarted our operations in a safe manner. I’m grateful to our employees, the first responders and all those who are working so hard to prepare the community to welcome back residents.”

Suncor Energy Inc. (TSE:SU) is a Calgary, Alberta based integrated energy company. The Company is focused on developing Canada’s petroleum resource basin, Athabasca oil sands. The Company operates in three business segments: Oil Sands, Exploration and Production, and Refining and Marketing. The Company’s Oil Sands segment includes Oil Sands operations and Oil Sands ventures operations. Its Exploration and Production segment consists of offshore operations off the east coast of Canada and in the North Sea, and onshore assets in North America, Libya and Syria. The Company’s Refining and Marketing segment is engaged in Refining and Supply, and Downstream Marketing. In addition, the Company explores, for, acquires, develops, produces and markets crude oil and natural gas in Canada and internationally. The Company also transports and refines crude oil, and markets petroleum and petrochemical products primarily in Canada. More from Reuters »

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.