RE:Now we are getting somewhereDepending on how big of a renewables takeover they would intend to go after, one thing's for sure: they will overpay, and SU's SP will suffer. I hope I'm not here when that happens
Obscure1 wrote: Excellent post by Experienced. I like where this is going and I would like to take it another step.
First off, I agree with Experienced that SU is going to be a huge cash cow. I also agree that SU must use the cash to move in another direction if the company wants to be embraced by the market. Where I differ from Experienced is that I think SU has a 20 to 40 year window of massive free cash flows so I'm not convinced that SU has to be in such a big rush to come up with a master plan in the next 18 months. However, I do agree that the sooner that SU presents a workable plan to the market, the sooner the pain that shareholders are currently experiencing will turn around.
It is one thing to say something needs to be done, and another to do it. The tobacco companies have been searching for a new direction for 40 years and they have not succeeded unless you consider vaping to be a real alternative. Big oil has been stagnating for 20 years and has only embraced real change this year now that a new breed of investors has spoken.
If SU doesn't redefine itself, I expect that it will remain a cash cow and provide solid returns to shareholders for years to come. However, the market will never embrace a company that is grouped in with a "dying industry".
If you take a look at NEE (NextEra Energy), you will see a boring utility that changed directions and has been richly rewarded by the market.
Experienced correctly noted that SU doesn't seem to have a clear plan or the expertise to move in another direction. That got me thinking about what SU does have that could link it to a future that the market could embrace.
SU has 500 gas stations that have now added EV charging capability. Can or should the company expand to EV charging centers for all of its stations. Should SU look to add EV charging centers off-site as they have hopefully gained a level of expertise that could give them a competitive advantage?
SU has gained some experience at Cogen. Can they become a leader in Cogen conversions and sell their expertise to other companies?
SU has recently started up a solar project. Can they use the experience to build or finance other solar projects?
I keep thinking about Brookfield, whose expertise is bringing tons of money to their subsidiaries which include renewables and infrastructure. Can SU use its cash flow to do the same by hooking up with start ups that do have the experience/expertise that SU is lacking?
I don't have the answers but I know that if SU doesn't find a new direction, the enormous opportunity afforded by having years and years of massive cash flow will be wasted.