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Strategies & Market Trends : Dino's Bar & Grill

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To: Goose94 who wrote (58401)	8/30/2019 7:51:09 PM
From: Goose94	Read Replies (1) of 202704

MEG Energy (MEG-T) revisited top pick from Eric Nuttall on BNN.ca Market Call Friday Sept 30th @ 1200ET To us, no stock better typifies the bust in the energy market than MEG. Trading at a 42 per cent free cash flow yield (at $60 WTI and $15 WCS differentials), the company can privatize itself with 2.5 years of free cash flow and would be left with 66 years of remaining production in one of Canada’s highest-quality oil sand projects. Given this distressed valuation, MEG is the most likely takeout candidate in Canada over the next year. With debt that is a little higher than comfort levels, the company intends to deploy the $570 million of free cash flow per year to reducing its leverage, arriving at the industry norm of 2 times debt-to-cash flow in the next 2.5 years, at which point it could pay a 37-per-cent dividend while keeping production flat. Our initial price target is its proved developing producing (PDP) value, which is $8.50 per share or 65-per-cent upside. MEG is our largest fund holding.

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