G&M Daily roundup of research and analysis from The Globe and Mail’s market strategist Scott Barlow
ATB Capital Markets analysts Patrick O’Rourke and Amir Arif look ahead to energy markets in 2025 and provide top picks,
“We believe that navigating near-term policy related risks (and the potential range of outcomes for commodity pricing and volatility, and associated impact on equity returns) will be one of the most material challenges/uncertainties energy equity investors will have to navigate entering H1/25 at this time with investors grappling with the potential impacts of tariffs (both directly on commodity price and netback impacts but also global economic demand), a Canadian Federal government increasingly hawkish on industry emissions (but facing significant internal and external political challenges), and potential strengthening sanctions of Russian and Iranian crude exports ... These near-term challenges generally see our 2025 forecasts for industry FCF yields well above long-term averages but modestly lower than 2024 … and 2023 levels. Over the past year, the market has continued to clearly differentiate between higher and lower quality business models, driven by an M&A cycle that has instructively placed a premium on inventory in transaction multiples. We favour higher quality business models/strong operational executors, at opportunistic valuations and favour AAV, ARX, CNQ and TVE, inflation insulated equities (PSK, TPZ), as well as high quality outsized resource bases (KEC, KEL) at this time”