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Compiling comments that experts make about stocks while on public TV.

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Eric Nuttall , Portfolio Manager

Sprott Assett Management


Date Signal Chart Symbol Company Opinion Price
2015-08-25 N/A Must be logged in to use chart A Commentary A Comment -- General Comments From an Expert

Energy. The implosion we have had rivals the great recession, and in fact is worse. In some cases names are trading at all-time lows. Negativity in the energy sector is unparalleled and is really historic. There are 3 reasons he feels people are so bearish on oil. 1.) We are told demand is very weak and there is a fear of Chinese demand falling. 2.) We are awash in oil with Iranian oil hitting the market and US production still up. 3.) The forward Strip with oil below $50 is all the way out to 2017. You can see why people are being far too negative. 1.) Demand today is at record amounts. Year-over-year growth rate is as strong as it has been since coming out of the great recession, so we consume more barrels today than we ever have in history. 2.) We know Chinese demand is weak, but he would love to see the data points that people actually have, because the numbers he has shows record oil imports into China and record gasoline consumption in China. Their demand has been flat lining for 3 years, so it is not a new story. If you remove China, emerging economic oil demand has been growing by 1 million barrels per day, each year for the past decade. At current oil prices, it is impossible for US production to grow and we are months away from it being down year-over-year. Even at $45-$55, US oil production could be down by half a million barrels per day by next year. The worst case of Iran is about 800 hundred thousand barrels a day to come onto the market. That represents 6 months of demand. For the past 5 years, outside of OPEC and the US, production has been falling while the average oil price has been over $100. There are companies that can theoretically still drill wells that have a positive rate of return, and yet are still going bankrupt. This is because the amount of cash flow most companies generate is not enough to offset their decline. 3.) The oil Strip tells us we should be negative. He believes we have to go to 2017 until oil is over $50. Looking historically at the predictive capability of Strip, the R squared is less than 1%. That means that one time out of 100 the Strip is actually accurate.

The valuation of these energy companies is unparalleled. You can get so much value for free, because everybody is so pessimistic. It is a waiting game of maybe 1-2 quarters. If he can buy stocks that are trading at 5X cash flow where he is getting possible reserves, their dividend, of which many are sustainable when we get a rally, stocks can go up by 50%-100%. He personally thinks we will recover to around $55-$60 at some point next year.


Price:
$0.020
Subject:
OIL, GAS & SMALL-CAP CANADIAN
Bias:
BULLISH on OIL
Owned:
_N/A
2015-08-25 COMMENT Must be logged in to use chart BTE-T Baytex Energy Corp

The market cap is significantly lower than what they paid for Aurora Oil and Gas, which was their entry into the Eagle Ford. Stock fell from $23-$6 in roughly 2 months. Cut the dividend to zero. They still remain a highly leveraged oil company, so if he is right in his call on oil appreciating to $55-$60, this is a name that could easily go up 100%. The debt is a little concerning. At current oil prices he doesn’t think it is sustainable. If you are bullish on oil with a recovery coming within 6 months, you could do extraordinarily well. If he is wrong on his oil call and it stays around $40-$45 for the next 6-9 months, this is a name that could get into some trouble.


Price:
$5.690
Subject:
OIL, GAS & SMALL-CAP CANADIAN
Bias:
BULLISH on OIL
Owned:
Unknown
2015-08-25 COMMENT Must be logged in to use chart CFW-T Calfrac Well Services Ltd

Trican (TCW-T) or Calfrac (CFW-T)? This is a better company operationally and geographically. Less debt, although they do have a lot of debt as well, so everything is not rosy. His preference would be Canyon Services (FRC-T).


Price:
$3.890
Subject:
OIL, GAS & SMALL-CAP CANADIAN
Bias:
BULLISH on OIL
Owned:
No
2015-08-25 HOLD Must be logged in to use chart CNQ-T Canadian Natural Rsrcs

This one comes down to your call on oil. If you think we are going to stay at $37-$38 forever, don’t own the stock and don’t buy anything else. Relative to other large caps, this wouldn’t be his top name. He would still lean towards a Cenovus (CVE-T) or Suncor (SU-T), but wouldn’t buy either because they have oil sands exposure. He also questions what the NDP government is going to come out with. They are more leveraged than most and have raw heavy oil exposure that they don’t upgrade, relative to Suncor. If you own it, crystallize a tax loss and roll it into another name that he likes better.


Price:
$25.840
Subject:
OIL, GAS & SMALL-CAP CANADIAN
Bias:
BULLISH on OIL
Owned:
Unknown
2015-08-25 TOP PICK Must be logged in to use chart CPG-T Crescent Point Energy Corp

The most mispriced oil/gas stock in Canada that he can find. Their proved reserves can produce oil for 10 years. At $55 oil, it is trading at 5.5X its total corporate value relative to cash flow. That means you are getting part of the proved reserves for free, their probable reserves for free and all of their own booked inventory for free. It has never traded as cheaply as it has today. Eliminated people’s major concerns and cut the dividend so it is right sized. He has it being sustainable at about $50-$55 or higher. The cash flow is around 2.5X. Eliminated their DRIP so there is no dilution. Dividend yield of 9.02%.


Price:
$12.790
Subject:
OIL, GAS & SMALL-CAP CANADIAN
Bias:
BULLISH on OIL
Owned:
Yes
2015-08-25 BUY Must be logged in to use chart DRT-T DIRTT Environmental Solutions

Stock had a massive rally last year because it was significantly undervalued. When it was approaching $7-$8 he thought valuation was getting a little long in the tooth, so he eliminated his position. There has been about a 40% correction in the last couple of months so he started buying at around $5.25-$5.30. Valuation is compelling. If you follow estimates, they are able to grow earnings by about 75%, and it is trading at around 16X. Raised about $42 million at around $8, so you buy the stock today 40% below where they raised their $42 million. Stock is weak because of exposure to China, but they have zero exposure there. Also, based in Calgary, so they must have enormous exposure to the energy sector, but that is only about 12% of their revenue. On valuation they are paying 16X earnings with 75% growth. About $80 million net cash on the balance sheet.


Price:
$4.940
Subject:
OIL, GAS & SMALL-CAP CANADIAN
Bias:
BULLISH on OIL
Owned:
Yes
2015-08-25 COMMENT Must be logged in to use chart EH-T easyhome

A business model that is egregiously profitable. Instalment lender which lends money to people who wouldn’t otherwise qualify with a bank, so are able to gets slightly higher interest rates. There are long-standing concerns about regulatory risks. Announced last quarter that they will be tightening up their lending standards, so will no longer lend to people at the very bottom of the barrel. It will take time to replace those with new higher grade customers. After 2 crappy quarters, he needs them to put a good quarter for him to have interest in the name again. Incredibly cheap.


Price:
$15.200
Subject:
OIL, GAS & SMALL-CAP CANADIAN
Bias:
BULLISH on OIL
Owned:
Yes
2015-08-25 COMMENT Must be logged in to use chart FRC-T Canyon Services Group

(Market Call Minute.) He wouldn’t necessarily buy this, but if he had a gun to his head, he would buy it over the other 2.


Price:
$4.250
Subject:
OIL, GAS & SMALL-CAP CANADIAN
Bias:
BULLISH on OIL
Owned:
Unknown
2015-08-25 COMMENT Must be logged in to use chart FRU-T Freehold Royalties

(Market Call Minute.) Has been a big buyer in this. His big concern is that Penn West (PWT-T) is their biggest royalty payer so if it goes bankrupt, what happens to their royalty income? It is a bit of a concern, but even excluding that, the stock has been pounded, and the royalty model should hold up a lot better than a conventional A&P model.


Price:
$9.030
Subject:
OIL, GAS & SMALL-CAP CANADIAN
Bias:
BULLISH on OIL
Owned:
Yes
2015-08-25 BUY Must be logged in to use chart GRC-X Grenville Strategic Royalty

Came out with their quarter last week where they announced that operations were fine. They do royalty agreements with companies that would not necessarily qualify for prime credit with the banks. It is normal for this business model to occasionally take a bad debt expense, and write the investment down to zero and then hopefully recover some of it. They did that on a $1 million loan which represented 2.5% of their loan book, and the market cap fell by $20 million. That was an overreaction. Just announced that one of their larger deals was acquired by Hitachi, so it is highly likely that they are going to get bought out. That means they will have more money to deploy. Thinks this sets them up for a dividend increase in 2016. A few more quarters will prove the viability of their business model. A dividend increase would help that along as well. Yielding about 8% and trading at about 16X so it is a good valuation.


Price:
$0.600
Subject:
OIL, GAS & SMALL-CAP CANADIAN
Bias:
BULLISH on OIL
Owned:
Unknown
2015-08-25 COMMENT Must be logged in to use chart GXO-T Granite Oil Corp

There has been pretty heavy insider buying. The challenge is that it is a single asset dividend payer. This gives you concentration risk. Came out with a 1200 barrel a day test in their core play. He is concerned that institutional support will never be huge because of the size of the company and the single asset risk. If you are looking for a fairly steady, low payout hedge producer, it is not terrible, but there are names he likes better. Yield of 6.8%.


Price:
$5.600
Subject:
OIL, GAS & SMALL-CAP CANADIAN
Bias:
BULLISH on OIL
Owned:
Unknown
2015-08-25 COMMENT Must be logged in to use chart LRE-T Long Run Exploration

Debt to cash flow is around 6X, which is high. Cut the dividend to zero, which led to a freefall in the stock. If you were an uber bull on oil, this is the type of name that could go up several fold. Personally it is not his strategy because he thinks he can make 50% or more buying more established names. Higher risk than what he would be comfortable with. In his estimation, they are unable to grow oil at anything remotely close to today’s oil prices. High debt, declining production, declining product pricing which is a tricky situation to be in.


Price:
$0.345
Subject:
OIL, GAS & SMALL-CAP CANADIAN
Bias:
BULLISH on OIL
Owned:
Unknown
2015-08-25 COMMENT Must be logged in to use chart MEG-T MEG Energy Corp

Debt is extremely high. Unless there is a miraculous oil recovery, there can be serious repercussions. If he is right on oil, you could double your money, but if he is wrong, it would be a struggle.


Price:
$10.640
Subject:
OIL, GAS & SMALL-CAP CANADIAN
Bias:
BULLISH on OIL
Owned:
Unknown
2015-08-25 TOP PICK Must be logged in to use chart NBZ-T Northern Blizzard Resources INC

Has fallen from $18 and he started buying at around $4. This company is 60% hedged on oil production next year, close to $80. Debt to cash flow is below 3X using Strip pricing. Have no debt maturity until 2022. Recently cut the dividend by 50%, and current yield is around 14%. Doesn’t see that being cut anytime soon. They are 100% Saskatchewan, so you have no exposure to the NDP uncertainty.


Price:
$3.680
Subject:
OIL, GAS & SMALL-CAP CANADIAN
Bias:
BULLISH on OIL
Owned:
Yes
2015-08-25 COMMENT Must be logged in to use chart NYX-X NYX Gaming Group Ltd

3rd largest manufacturer of gaming technology, and get a cut of the winnings from casinos globally. The fall in the stock is a little bewildering. Operationally things seem to be going very well. They finalized a $150 million acquisition of Chartwell and Cryptologic in June and raised $60 million at around $4.45, so you can buy the stock 40% lower without assuming a deal risk. Expects them to make $0.35 in earnings next year. Trading at about 6.5X in forward earnings and the CEO believes they can grow top-line at around 30% a year. That should translate into a minimum, he hopes, of 30% EPS growth. Board owns about 30% of the stock.


Price:
$2.320
Subject:
OIL, GAS & SMALL-CAP CANADIAN
Bias:
BULLISH on OIL
Owned:
Yes
Showing 1 to 15 of 923 entries
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5 Comments

petersirie

December 17th 2012 at 6:46pm

Keep up the quality commentary please. I have really appreciated your insight.

boblewellyn@yah

March 16th 2013 at 7:50pm

There is a report that Petrobakken has started a gas injection program that has substantially increased their production and reserves. Stock closed at $9.50 on Friday, March 15, 2013, probably because of this report.

car2nz

April 10th 2014 at 3:12pm

When Eric says BUY...You should be SELLING ...When he says Sell...You should be BUYING. He is consistently WRONG! It's amazing!

BeauRegard

April 21st 2014 at 3:36pm

Not the sharpest knife in the drawer!

CH-Investments

April 26th 2014 at 10:04am

Not a fan of all his picks but some of them have great potential to generate a large profit. Have found a number of decent picks here and have done my own analysis which has made me operate at a decent profit.


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