Account Information

  • My Account

    Manage all your subscriptions, update your address, email preferences and change your password.

  • Help Center

    Get answers to common service questions, ask the analyst or contact our customer service department.

  • My Stock Talk Profile

    Update your stock talk name and/or picture.


How To Collect Your Share of My Million Dollar Giveaway

How To Collect Your Share of My Million Dollar GiveawayWe recently kicked off the most outrageous initiative in the history of investment research. It’s called the Income Millionaire Project. And the goal is simple: create 1,000 income millionaires. That’s a $1 billion goal! No one has ever tried it before, but that doesn’t bother me. I’m so sure you can use this program to make a million bucks… I’ll pay you $1,000 to start your journey. Go here for details.


Cash Is King in a Downturn

By Ari Charney on September 17, 2015

There’s always someone ready to take advantage of someone else’s bad luck. And that’s certainly the case amid the turmoil in Canada’s energy patch.

While many oil and gas producers borrowed heavily to boost growth when times were good, some understood that they would need to preserve capital for when the cycle inevitably turns.

Of course, in this environment, even companies with strong balance sheets and diversified operations are suffering. But they’re not suffering nearly as much as many of their competitors. And that makes all the difference.

The biggest players in the energy sector can afford to take a long-term perspective because they have operations that benefit when energy prices are high, such as exploration and production (E&P), and operations that benefit when energy prices plummet, such as refining.

And diversified operations coupled with prudent financial management mean these firms have the financial strength to scoop up top assets from troubled competitors on the cheap. That’s how the biggest and best firms extend their dominance over the long term.

“Some of the integrated E&P players are actually swimming in cash and need to figure out how to spend a liquidity war chest,” James Jung, an analyst with DBRS, told Bloomberg.

So who’s in the catbird seat on the mergers-and-acquisitions (M&A) front? According to Citigroup, Suncor Energy Inc. (TSX: SU, NYSE SU), which is Canada’s largest oil company and one of our favorite stocks in the sector, could undertake some serious M&A.

And Citi says that Suncor’s strong balance sheet and refining profits put it in one of the best positions to be a major industry consolidator.

In fact, Suncor CEO Steve Williams is looking to put the nearly CAD5 billion in cash on the CAD50 billion firm’s balance sheet to work. “We have too much cash on our balance sheet,” he recently observed. “We’ve been generating more cash than we anticipated when put that $5 billion in the bank.”

However, he also conceded that while Suncor is looking closely at various opportunities, it has “nothing planned” at present.

But as the notion that energy prices could be lower for longer becomes conventional wisdom in corner offices across the sector, this could finally push beleaguered firms to the bargaining table.

Indeed, Williams said that the spread between what Suncor is willing to pay and what distressed firms are willing to accept has narrowed considerably.

Still, he’s willing to be patient for the right deals at the right price, noting that “time is on our side in terms of waiting.”

As for who might be in the crosshairs, Citi says that smaller oil sands producers trading near or below book value might make attractive targets. In particular, analysts cited MEG Energy Corp. (TSX: MEG, OTC: MEGEF) and Canadian Oil Sands Ltd. (TSX: COS, OTC: COSWF), which currently trade at around 0.5 and 0.8 times book value, respectively, as potential takeover candidates.

At the same time, Suncor could opt to return at least some of this cash to shareholders. The firm has certainly done so in the past, with a dividend that’s grown a staggering 23% annually over the past five years.

And it also recently announced plans to buy back as much as CAD500 million worth of shares over the next 12 months. While it could always defer those plans, it’s made good on them in the past, buying nearly CAD900 million worth of shares during the second half of 2014.

Our preference? How about a little of each—M&A, dividends and buybacks—we’re feeling a bit greedy.

You might also enjoy…


Forget Buy and Hold. Here’s how to retire faster…

I’m not a fan of “buy and hold.” Gurus like to tell you that patience is the key, but I call horse puckey.

We’ve discovered an investing technique that consistently pays out easy-to-repeat profits.

One that’s proven to beat the market 2,082% in head-to-head testing.

And one that’s generated over 488 winners since 2011.

This method is so powerful, in fact, some of the investors we’ve let use it reported back to us saying they’ve made $71,425… $82,371… and even as much as $151,000 in a single year thanks to this “trick.”

That’s how powerful this investing technique is!

What what exactly is this mysterious method? I’ve put all the details together here.

Stock Talk — Post a comment Comment Guidelines

Our Stock Talk section is reserved for productive dialogue pertaining to the content and portfolio recommendations of this service. We reserve the right to remove any comments we feel do not benefit other readers. If you have a general investment comment not related to this article, please post to our Stock Talk page. If you have a personal question about your subscription or need technical help, please contact our customer service team. And if you have any success stories to share with our analysts, they’re always happy to hear them. Note that we may use your kind words in our promotional materials. Thank you.

You must be logged in to post to Stock Talk OR create an account.

Create a new Investing Daily account

  • - OR -

* Investing Daily will use any information you provide in a manner consistent with our Privacy Policy. Your email address is used for account verification and will remain private.