Nuttall DetailsFirst stock in the clip. GLTA
https://www.bnnbloomberg.ca/video/eric-nuttall-s-top-picks~2081633
TORC Oil & Gas (TOG TSX)
A top pick for several shows now, TORC offers compelling valuation using strip pricing (which is unsustainably low) and very meaningful upside in a better oil price environment. At strip pricing of $43 WTI in 2021, TORC could generate free cash flow of $63 million equating to a 15 per cent free cash flow yield (they could privatize themselves in six years at the current oil price). We think oil could rally to $50 WTI in early 2021 and eventually $60 by year-end 2021 at which time TORC would be trading at a 29/50 per cent free cash flow yield. Given management’s reputation for delivering, adequate balance sheet strength and ability to weather the storm we see upside of 106/211 per cent using a 5 times multiple at $50/$60 WTI. Further, with CPP as a major shareholder we hope TORC is able to scale up in order to gain greater relevancy via M&A and as the commodity price improves, their ability to reintroduce a dividend should lead to a quick rerate.
TOP PICK
Torc Oil & Gas Ltd (TOG-T)
November 20, 2020
A huge laggard this year. It is trailing other names at 20-30%. They have not yet reinstated dividends. They should reinstate it early next year. At current levels, the stock trades at 14% free cashflow yield. At $50-$60 oil, it trades at 30%-60% free cashflow yield for dividends and buy-backs. (Analysts’ price target is $2.46)
Eric Nuttall
Price
$1.82
Owned
Yes