Reinvesting all of its cash flow and paying just a nominal dividend, buy-recommended Suncor (SU) offers low cost participation in growing production from oil sands for taxable investors. Fourth quarter results reported today exceeded our projections while management was disappointed not to meet its expectations.
The lowest McDep Ratio in our regular analysis of the company in at least eight quarters reflects a recent decline in stock price as well as an increase in Net Present Value to $122 a share from $105 a share.
NPV increased on December 18 when we raised our long-term oil price for calculating present value to $80 from $66 a barrel. We also allowed for higher taxes to be imposed by the province of Alberta, though Suncor has protection to about 2015. Despite formidable operating and construction challenge, management expects Suncor to exit 2008 with 350,000 barrels daily of oil sands capacity, up from about 250,000 today. Likely government responses to debt-stressed capital markets may keep oil price on its long-term uptrend, reinforcing the appeal of Suncor stock.
The lowest McDep Ratio in our regular analysis of the company in at least eight quarters reflects a recent decline in stock price as well as an increase in Net Present Value to $122 a share from $105 a share.NPV increased on December 18 when we raised our long-term oil price for calculating present value to $80 from $66 a barrel. We also allowed for higher taxes to be imposed by the province of Alberta, though Suncor has protection to about 2015. Despite formidable operating and construction challenge, management expects Suncor to exit 2008 with 350,000 barrels daily of oil sands capacity, up from about 250,000 today. Likely government responses to debt-stressed capital markets may keep oil price on its long-term uptrend, reinforcing the appeal of Suncor stock.
Read more | Digg story
No comments:
Post a Comment