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Strategies & Market Trends : Dino's Bar & Grill
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To: Goose94 who wrote (130841)8/12/2022 2:46:05 PM
From: Goose94Read Replies (1) of 203382
 
Crude Oil: While the market frets of potential regional recessions and the impact that would have on short-term demand, the real story for oil remains on the supply side. The world has entered into a multi-year oil bull market due to structural supply challenges: U.S. shale hyper-growth is over as investors demand “returns” in the form of dividends and buybacks overgrowth. OPEC is set to imminently exhaust its spare capacity and the global supermajors cannot grow due to too many years of insufficient investment. Short-term, if demand growth slows, there are demand drivers such as gas-to-oil switching in Europe that could make up for any recessionary-induced weakness in demand.

With the sector trading at an estimated free cash flow yield of 28 per cent and codifying the return of 50-75 per cent of it back to investors in the form of dividends and share buybacks, we see a meaningful potential upside of more than 150 per cent in many names. We especially see upside in Canadian oil small and midcaps that are trading at 30 per cent-plus free cash flow yields despite near debt-free status, sub 2x enterprise value to cash flow multiples, and a strong commitment to not grow and instead pay juicy dividends and buyback meaningful amounts of stock. We remain bullish.

Mr. Eric Nuttall on BNN.ca Market Call Friday August 12th @ 1200ET
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