RE:RE:RE:RE:Buy or wait?Obscure1 wrote: Great comments guys as usual.
Migraine: You mentioned that MEG should be a $60 stock in a normal market. What is a normal market? Why is MEG trading at 25% of $60? These are honest questions?
I can look at the anticipated new Tesla production numbers for Giga Shanghai at 4,000 vehicles per week (insane) beginning next week and do the math. I can build in their Freemont production and the anticipated ramp up of Giga Austin and Giga Berlin as long as demand remains intact. I can also build in how their production costs are now plummeting to forecast future profitablity. From there, Tesla gets really complex as the street obviously doesn't have a clue how to price in the present value of future cash flows from FSD, insurance (Tesla will be the biggest auto insurance company in the world in the near future), Super Charging (Tesla is already the biggest in the world and is hasn't even begun to get started yet), Cyber Truck, Robotaxi and all of that combined will pale in comparison to their AI dividision is and when they get Optimus up and going (we will get an update on September 30th on AI day).
This is a SU thread, not a TSLA thread, so I'm just using TSLA as a base of comparing its complexity to what appears to be an incredibly simple set of metrics for Suncor. SU mines and upgrades oil, refines it, and sells it. Pretty simple stuff in terms of analysing the production aspect. We know the fixed and variable costs so the only real question is the impact of the price of a barrel of oil.
Figuring out a realistic share price for SU should be as simple as creating a spread sheet (I like the one from the guy at Royal Bank that somebody here updates). It can't be that difficult to model what the price of SU should be based upon the price of a barrel of oil and the crack spreads by applying a historical beta.
Why has nobody done this? If it doesn't exist, why not?
I'm trying to figure out whether to add another 5k shares this afternoon. Every oil company Q2 report I have seen so far (even the OXY numbers that appeared as a miss in the headlines where a huge beat if you dig a little deeper) have been stunning and no adverse operating events were reported by SU during Q2. The answer should be simple but absolutely bloody nothing about SU makes sense to me.
Curiously, in a way you answered your own question in your post....
The TSLA numbers you quoted plus what ever the numbers are from their other factories plus what the other auto manufacturers produce represent a reduction in oil demand for gasoline and oil based products such as engine oil.
Oil will not be part of the increased demand for electricity from more EVs in the auto stock going forward.
All this comes back to points I have made in the past, that SU needs to invest its current huge FCF into businesses that in the coming years can generate at least as much FCF as they currently get from producing oil, refining it and selling gasoline. All this put s a cloud over the company and hence its SP.
At least at this point in time, they have started a course correction by getting rid of Little but much depends on who they get as a new CEO. In the shorter run, it would seem that supply issues on the oil side will likely offset demand reduction from more EVs coming into the market each year but after a few years this will not be the case. So for now these two reasons are why I have decided to take a small underweight position in SU but for me to take SU as a long term hold they will need to show me they have a game plan to offset declining demand for oil from EVs. Others may not be as patient as I am and that why the SP doesn't really reflect the company's metrics.