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Canadian Oil Sands (COS)

398K views 1K replies 147 participants last post by  Parkuser 
#1 ·
Any thoughts on this stock? Been hit pretty hard lately, 52 week low, 5% dividend. Thinking about taking a position soon.
 
#4 ·
If you're looking for yield, go for it. But I'd prefer suncor or cnrl over COS. Perhaps I'm biased because I work at Syncrude. I don't like the joint venture structure, and I believe they're having trouble reigning in costs compared to other producers. One way they are cutting costs is an employee reduction program through attrition and limiting new hires.
 
#10 ·
Recent drop is probably due to the stock going ex-dividend last Wednesday. I think these type of stocks are far too beaten up and trading at similar prices to the 2008 financial crisis when oil was half the price it is now. I won't be "backing up the truck" but I'll probably continue to add to my position if the price goes lower. Fundamentals look much better than with many other energy stocks.
 
#14 ·
The 6.8% divy is very enticing.

Does anyone know whether they are one of the operations that does their own refining and thus is not penalized by the Cushing discount? I think Suncor has this advantage but IMO doesn't if I recall correctly.

CNQ is also looking very cheap these days but they are penalized more by the low price on natural gas than the others here. They are growing the divy at a fairly high rate but it is still very low on an absolute basis and it looks like they have room to grow it.

Athabasca oil is also very cheap considering the assets they have to develop over time.

I think the true scarcity of oil is being underestimated these days because Iran is still producing and Saudi Arabia is in overdrive. Many of the newer sources that are being found are very expensive to develop and really need a floor price of $80-90/barrel to be considered economic. I wouldn't be surprised if there is some cutback upcoming in the development of the oil shales given the faster rate of depletion than is currently appreciated.

I do feel the Canadian oil operators are going to be selling artificially cheap so long as we lack the ability to get the oil to a refinery with access to the sea for export.

The government needs to step up and dictate rules to all the parties that are in the way (re: Native Indians on the West Coast). This resource is needed so we can fund their welfare programs and it is for the good of all Canadians including them. A fair settlement will be dictated for rent of the landspace for the pipelines and the companies will be responsible for paying any environmental damages that are incurred.
 
#16 ·
... The government needs to step up and dictate rules to all the parties that are in the way (re: Native Indians on the West Coast). This resource is needed so we can fund their welfare programs and it is for the good of all Canadians including them. A fair settlement will be dictated for rent of the landspace for the pipelines and the companies will be responsible for paying any environmental damages that are incurred.

oh, my. This point of view prevailed from 1542 to the 1970s, but i didn't think anyone today would offer it in serious mode.

no one today would label first nations "in the way," when they are, in fact, living upon their own hereditary lands.

no government or oilco today would "dictate" a "fair settlement ... for rent of the landscape."

fortunately, enbridge itself is lightyears ahead of this dated view. The pipeline-to-kitimat consortium is offering partnerships to first nations who join them.

http://www.northerngateway.ca/aboriginal-engagement/benefits-for-aboriginals/

" Northern Gateway is offering Aboriginal people a 10% share in a $5.5 billion project. The long-term financial benefits for participating Aboriginal shareholders will be significant. Aggregate equity ownership is expected to generate approximately $280 million in net income to neighbouring Aboriginal communities, over the first 30 years.

" Becoming an owner in this project means Aboriginal groups are going to see cash flow within the first year of operations. Through equity ownership, Aboriginal people will be able to generate a significant new revenue stream that could help achieve the priorities of their people – such as improved health care, education and housing.
"

however, the campaign to recruit first nations as enbridge partners is not going well. First nations have become polarized. Some oppose the use of their land for cultural & spiritual reasons. Others holding out may be looking for bigger royalties & a higher level of skilled hiring along with training for the same, plus the holdouts probably want bigger remediation bonds.
 
#24 · (Edited)
a payout ratio of 60% is....not good. Typically below 40% is good because sufficient profits are being reinvested into the company.
Depends on the size and opportunity for growth of the company. I would rather see a payout ratio of 60 than a payout of 40 and the company making acquisitions in an area they know nothing about. Some companies should use cash flow for payout and others should use earnings for payout. I am even fine with certain companies paying out 90% provided it is growing earnings . You have to compare the payout ratio to the rest of the industry. You also have to compare other variables. It's not just here's a line in the sand. why 40%? why not 42%? But yes the lower the payout the better to a point.
 
#28 ·
It makes sense as they aren't as steady a business as PG or KO. In principle as they expand and produce more oil and oil prices continue on their upward trajectory it makes sense that they should have more FCF over time to pay out their dividend. I don't think anyone can reliably count on them to pay an ever increasing dividend yield like clockwork but I think a tranche bought now at this price should set you up for a good dividend play with potential for capital appreciation once the discount on resource stocks settles down.
 
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