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Strategies & Market Trends : Dino's Bar & Grill -- Ignore unavailable to you. Want to Upgrade?

To: Goose94 who wrote (53685)	1/25/2019 8:20:43 PM
From: Goose94	Read Replies (1) \| Respond to of 203329

MEG Energy (MEG-T) top pick from Eric Nuttall on BNN.ca Market Call Friday Jan 25th @ 1200ET Husky Energy (HSE-T) deciding to walk from its hostile takeover attempt is a gift to energy investors bullish on the oil price. MEG is the purest way to get exposure to either higher oil prices or narrowing/narrowed WCS differentials. The market is nearly finished absorbing the 100 million shares that were held by arbitrage investors. As the broader market gets more bullish on higher oil prices and sustainably “low” WCS differentials, MEG should benefit. While concerns about its balance sheet are reasonable at $50 WTI, we believe the market is underappreciating the amount of free cash flow that MEG generates at slightly higher oil prices. At $55 WTI and a $20 WCS differential, MEG will generate $23 million of free cash flow in 2020 and this doubles at $60 WTI to $485 million, resulting in MEG currently trading at a 31 per cent free cash flow yield next year. Using a six-time 2020 target EBITDA multiple, a $60, $65 and $70 WTI with a $20 WCS differential would generate a price targets of $9.50, $14.50 and $19.50 respectively; that’s 80 to 270 per cent upside. A good rule of thumb: every $1 move in WTI above $55 is worth $1 to MEG’s share price.