![]() ![]() New reactor technology is materially different and much less risky vs. Uranium spot market has been dead money since Fukushima back in 2011, as the world turned away from nuclear despite having some of the most obvious “green” characteristics versus alternatives. It’s not an ETF though, rather it’s a closed-end fund, and its sole purpose is to issue units to buy and sequester physical uranium “yellowcake”. This pick is more of a special situation, as SPUT as its now known is a pure-play on the uranium physical market. Recently announced purchase of Storm Resources – immediately accretive, and didn’t need to pay much a premium for the assets, assuming they are able to close the transaction.Ī stable way to participate in what we think are fairly early innings for the energy bull market. They been using cashflow to reduce debt, pay dividends, and return capital to shareholders. No balance sheet issues, and a healthy yield at 4.5 per cent. ![]() Trades at 6x EV/EBITDA, 13x PE, 8x Free cash flow. Has both strong price momentum, in the top 10 per cent of TSX stocks, but also scores well on value. CNQ has a large, diversified asset base in natural gas, crude oil, oil sands, and overseas. Perversely, ESG policies, which have starved the industry of capital, and pushed governments to delay or stop new traditional energy development and pipelines, are also causing higher prices. While the high price of natural gas and crude oil are the drivers, if we are in a “transitory for longer” environment, prices may well stay high for some time to come. Jason Mann, chief investment officer at EHP Funds, discusses his top pcisk: Canadian Natural Resources, Sprott Physical Uranium, and Copper Mountain Mining.ĭespite recent returns, energy stocks remain cheap – and in fact are actually *cheaper* than they have been in years due to the very strong cash flow that has reduced debt and been used to buy back shares or do accretive acquisitions. We’re avoiding or are net short expensive growth stocks and more defensive sectors like utilities. That has us maintaining weights to high-quality cyclicals in materials (lumber, copper, steel), as well as related construction and transportation businesses, and then exposure to larger financial and technology businesses. It’s a long way down from “growth” to “value”. High-priced growth stocks are at great risk in this environment, as the last month has shown, with many former high-flying tech stocks off 50 per cent or more from their peaks. In a stagflation environment, you want a barbell approach of stocks that benefit directly from inflation: commodities and related businesses, as well as high-quality, larger-cap, low volatility stocks with strong earnings growth (as opposed to speculative top-line growth). So much so, in our view, that the real risk currently is “stagflation” where inflation increases as growth slows from its peak. That, coupled with fiscal stimulus, is leading to a “transitory for longer” environment for inflation. The other reality is that case counts are the less important measure than hospitalizations. ![]() We think resurgent COVID won’t slow re-openings much, particularly in large economies like the U.S., which continue to take a “plough forward” approach overall. While some of the problems are supply chain related, the reality is that demand for products and labour is far outstripping supply. Fund flows into equities are very strong, and corporate buybacks have returned in force.Ĭentral banks are now dealing with a different problem: inflation. Markets continue to rally, looking through the resurgence of COVID in some countries, backstopped by supportive central banks and ongoing fiscal stimulus from the Biden administration.Įarnings have also been stellar, doing their best to catch up to some historically high valuations. Jason Mann, chief investment officer at EHP Funds ![]()
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