RE:RE:RE:Eric's Top Pic....Possibleidiot01 wrote: Only one of the three Top picks to be
owned personally, by family and in fund .
I think that says something. BAYTEX ENERGY (BTE TSX)
At US$80WTI Baytex is set to return 95 per cent of its current market cap back to investors in the form of share buybacks and dividends over the next five years despite having an estimated 13 years of stay-flat inventory. Generating $765 million of free cash flow and returning half of it back to shareholders in the second half of this year, the company is set to retire 10 per cent of its shares outstanding in the next six months. Despite poor performance over the past year, we are sticking with the stock, believing that a 29 per cent free cash flow yield and 2.4 times trading multiple are sharply disconnected from fair value
NUVISTA ENERGY (NVA TSX)
Over the next several years Nuvista will grow production from 85,000 barrels of oil equivalent per day (boe/d) to 120,000 boe/d, and then keep production flat for 20-25 years. Returning 75 per cent of its free cash flow now we see this increasing to 100 per cent in a few years time, thereby increasing annual shareholder returns from 11 per cent currently to over 20 per cent. Trading at three times EV/CF despite having decades worth of inventory, we think fair value today should be five times EV/CF = 10 per cent FCF yield = $22.50 target price = > 60 per cent potential upside.
PRECISION DRILLING (PD TSX)
Despite sluggish oilfield service activity levels currently Precision is rapidly harvesting free cash flow, paying down debt, and returning over 30 per cent of its free cash flow back to shareholders. We are bullish on an increase in natural gas and oil activity in 2025 and have the stock trading at a 23 per cent / 26 per cent 2024/2025 free cash flow yield. Given non-depleting assets we think a 13% free cash flow yield approximates fair value = five times EBITDA = $191 target price = 107 per cent potential upside.
| DISCLOSURE | PERSONAL | FAMILY | PORTFOLIO/FUND |
| BTE TSX | Y | Y | Y |
| NVA TSX | N | N | Y |
| PD TSX | N | N | Y |
I like Eric and always like when he gives stocks I own a bump.
However, some pretty quick math says they don't have the fcf to buyback 10% in the next 6 months. Half of 765 is 382.5. some of the 382.5 is needed for the dividend but the bigger issue is with that level of buyback you'd expect some price appreciation. I'd be thrilled if they bought back 60M shares at roughly 340fcf. They won't get near 80m shares for 340 fcf. Assuming they hit 340 fcf. Would be nice to see them actually beat fcf expectations