RE:New Comments from TD SecuritiesOnce NATO is 80% to 90% contracted and the market is comforted that NATO’s construction is on track, CUS shares will re-price materially higher. A dividend cut (which in my opinion is unwarranted) may create some short term headwinds, but for investors this doesn’t change the substantial upside ahead once NATO’s starts contributing cash flow. A valuation at $7+ is very likely in early 2015. This is a potential 40% upside from current levels.
I need to stress again that NATO is it for Canexus. The chemical business value and potential is well understood by the market, it is a mature business with known multiples and predictable earning potential. It is truly all about NATO and it is not question about whether NATO will deliver, it is a question of how big of an impact will it have?. Once, NATO is generating cash flow, will they partner with someone for a portion of the business? Will they develop their oil/condensate storage business? Will they handle increasing amounts of condensate?. While 2014 would have been a year of uncertainty, 2015 will be a year of good options.
We are almost there; only 4 to 5 months before NATO is completed and ramped up, the tide will turn soon enough.
For those in doubt, here is a comment from Howard Marks (one of the world most respected investors), this is what Buffett said Marks: "When I see memos from Howard Marks in my mail, they're the first thing I open and read. I always learn something..”
Here is what Marks says about achieving superior returns in the markets:
- Most great investments begin in discomfort. The things most people feel good about – investments where the underlying premise is widely accepted, the recent performance has been positive and the outlook is rosy– are unlikely to be available at bargain prices. Rather, bargains are usually found among things that are controversial, that people are pessimistic about, and that have been performing badly of late.
- To succeed at any activity involving the pursuit of gain, we have to be able to withstand the possibility of loss. A goal of avoiding all losses can render success unachievable almost as readily as can the occurrence of too many losses.
- Being too far ahead of your time is indistinguishable from being wrong.
- Unconventional behavior is the only road to superior investment results, but it isn't for everyone. In addition to superior skill, successful investing requires the ability to look wrong for a while and survive some mistakes
Regards,
Nawar