Recommendation: Speculative Buy
| Entry Date | Symbol | Recommendation | Entry Price (CAD) | Target 1 (CAD) | Target 2 (CAD) | Holding Duration | Potential Upside* |
|---|---|---|---|---|---|---|---|
| 26 Nov, 24 | CVE | Speculative Buy | CAD 22.18 | CAD 24.62 | CAD 26.09 | 55 days | 17.6% |
*Potential Upside (%) indicates the expected percentage increase from the Entry Price to the Target 2 Price.
Data Powered by EOD Historical Data (“EODHD”).
Cenovus Energy Inc., together with its subsidiaries, develops, produces, refines, transports, and markets crude oil, natural gas, and refined petroleum products in Canada and internationally. The company operates through Oil Sands, Conventional, Offshore, Canadian Refining, and U.S. Refining segments. The Oil Sands segment develops and produces bitumen and heavy oil in northern Alberta and Saskatchewan. This segment assets include Foster Creek, Christina Lake, and Sunrise projects, as well as Lloydminster thermal and conventional heavy oil assets. The Conventional segment holds natural gas liquids and natural gas assets primarily located in Elmworth-Wapiti, Kaybob-Edson, Clearwater, and Rainbow Lake operating in Alberta and British Columbia, as well as interests in various natural gas processing facilities. The offshore segment engages in offshore operation, exploration, and development activities in China and the East Coast of Canada. The Canadian Refining segment owns and operates Lloydminster upgrading and asphalt refining complex, which converts heavy oil and bitumen into synthetic crude oil, diesel, asphalt, and other ancillary products, as well as Bruderheim crude-by-rail terminal and ethanol plants. The U.S. Refining segment refines crude oil to produce gasoline, diesel, jet fuel, asphalt, and other products. Cenovus Energy Inc. is headquartered in Calgary, Canada.
Lower Net Debt: CAD 4,196 mn in Q3 2024 vs CAD 5,976 mn in Q3 2023
Higher Cash and Cash Equivalents: CAD 3,104 mn in Q3 2024 vs CAD 2,227 mn in Q4 2023
Lower Operating Margin:m: CAD 2,408 mn in Q3 2024 vs CAD 4,369 mn in Q3 2023
Lower Revenue: CAD 14,249 mn in Q3 2024 vs CAD 14,577 mn in Q3 2023
Volatility in the commodity price , Regulatory risks, Inflationary pressures, Derivative headwinds, etc.
| Entry Price | Support* | Target 1 | Target 2 |
|---|---|---|---|
| 22.18 | 18.7 | 24.62 | 26.09 |
Data Source: REFINITIV, Analysis: StockNextt
*Support can be considered as an indicative stop-loss, and if prices move below that level on closing basis individuals may evaluate exiting the position depending on their risk appetite, previous holdings, and other factors considered. The support and resistance levels may need to be re-evaluated within 4-6 weeks’ time frame depending on the stock price movements from the date of recommendation on the stock.
Improved downstream throughput: The company's Average crude oil unit throughput was 642.9 thousand barrels per day in the quarter, an increase of 20.2 thousand barrels per day from the second quarter. The increase was largely driven by the Lloydminster Upgrader returning to full operations following turnaround activity in the second quarter.
Advanced its Oil Sands growth projects: During the quarter, the Company advanced its Oil Sands growth project. The Narrows Lake tie-back pipeline to Christina Lake is approximately 93 percent constructed and is on track to achieving mechanical completion by the end of the year. As part of the Sunrise growth program, the group also brought two new well pads online.
An income play: The dividend pay-out practice translates into an essential factor for regular income-seeking investors with a long-term horizon. Moreover, at the last closing price of CAD 22.18 as on 25 November 2024, the stock offered a healthy dividend yield of 3.18%, which looks decent considering the current interest rates.
Considering the expected valuation upside, higher production, higher production, healthy guidance, improving cash flow profile, decent dividend yield, current trading levels and key business risks a ‘Speculative Buy’ recommendation has been given on the stock at the last closing price of CAD 22.18, as on November 25, 2024.
Data Powered by EOD Historical Data (“EODHD”).
Sector: Energy Industry: Oil & Gas Integrated
| Company | Change (CAD) | Price (CAD) | Trailing PE (x) | Forward PE (x) | Price Sales TTM (x) | Price to Book Value (x) | Enterprise Value to Revenue (x) | Enterprise Value to EBITDA (x) |
|---|---|---|---|---|---|---|---|---|
| CVE Cenovus Energy Inc |
-0.055 0.28% | 19.95 | 10.80 | 13.51 | 0.71 | 1.39 | 0.81 | 4.60 |
| SU Suncor Energy Inc |
-0.18 0.32% | 55.54 | 9.29 | 14.04 | 1.35 | 1.54 | 1.49 | 4.72 |
| IMO Imperial Oil Ltd |
-1.32 1.27% | 102.63 | 11.27 | 13.28 | 1.04 | 2.25 | 1.14 | 6.68 |
Data Powered by EOD Historical Data (“EODHD”).
Markets are trading in a highly volatile zone currently due to certain macroeconomic issues and geopolitical tensions prevailing. Therefore, it is prudent to follow a cautious approach while investing.
Note 1: Past performance is not a reliable indicator of future performance.
Note 2: The reference date for all price data, currency, technical indicators, support, and resistance levels is November 25, 2024. The reference data in this report has been partly sourced from REFINITIV.
Support: A level at which the stock prices tend to find support if they are falling, and a downtrend may take a pause backed by demand or buying interest. Support 1 refers to the nearby support level for the stock and if the price breaches the level, then Support 2 may act as the crucial support level for the stock.
Target: A level at which the stock prices tend to find resistance when they are rising, and an uptrend may take a pause due to profit booking or selling interest. Target 1 refers to the nearby resistance level for the stock and if the price surpasses the level, then Target 2 may act as the crucial resistance level for the stock.
Stop-loss: It is a level to protect further losses in case of unfavourable movement in the stock prices.
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