Market Call: Market Outlook: There has been a substantial rally in the stock markets from the middle of November to now driving U.S. markets to all time highs. Excellent profit growth plus economic stimulus measures are fueling the fire for this latest rally. The U.S. economic recovery is continuing (housing/auto sales strong and jobs slowly starting to be created) and a soft landing in China is adding to global growth. The commodity sector continues to face mixed data as the market struggles with Chinese growth figures. The TSX is grossly underperforming other resource-rich markets such as the Australian ASX.
TOP PICKS:
Cenovus Energy (CVE TSX) Last purchase Feb 21, 2011 at $39.45
Cenovus is an integrated oil & gas company with both conventional O&G and oil sands assets and production. It produces about 265,000 barrels per day with 70 percent exposure to oil resulting in cash flows of over $4 per share. It also owns a 50 percent interest in two refineries (Wood River and Borger) so it is able to maximize the price of oil that is sells. It remains the go-to name for SAGD exposure, has a natural refining hedge and is able to execute on its oil and gas resources.
HudBay Minerals (HBM TSX) Last purchase Feb 7, 2013 paying $11.28
HudBay Minerals is a diversified Canadian mining company producing metals as zinc, copper and other precious metals. It is vertically integrated as it owns plants to process the ore. Properties include the Kanuto Lake and 777 mines in Manitoba, ore concentrators in Snow Lake and Flin Flon, MB and a development with Lalor Lake. It purchased a large Constancia gold/copper/zinc project in Peru.
Gibson Energy (GEI-T) Last purchase June 13, 2012; Average cost $20.84
Gibson is a diversified midstream company servicing the oil industry in Western Canada and the U.S. It provides services to O&G companies allowing them to get the oil from the wellhead to the refinery. It has five divisions and each division provides under 33 percent of total EBIDTA. Significant growth lies ahead with capex programs of $235 million for 2013 (up $60 million from before) which will result in additional EBITDA.
| Disclosure: | Personal | Family | Portfolio/Fund |
| CVE | N | N | Y |
| HBM | N | N | Y |
| GEI | N | N | Y |
PAST PICKS: October 9, 2012
Whitecap Resources (WCP TSX)
| Then: $7.88 | Now: $9.04 | +14.72% | TR: +16.02% |
First Quantum Minerals (FM TSX)
| Then: $20.86 | Now: $18.42 | -11.70% | TR: -11.70% |
Yamana Gold (YRI TSX)
| Then: $18.06 | Now: $14.52 | -19.60% | TR: -19.29% |
Total Return Average: -4.99%
| Disclosure: | Personal | Family | Portfolio/Fund |
| WCP | N | N | Y |
| FM | N | N | Y |
| YRI | N | N | Y |
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