Canadian Oil Offers More Bang for the U.S. Buck

The problems of excessive leverage in the financial sector have contributed to bargain stock prices for healthy energy companies, particularly in Canada where the recent strength of the U.S. dollar adds further to the current attraction of buy recommendations Encana (ECA) and Canadian Oil Sands Trust (COSWF.PK). By the McDep Ratio, only the emerging market group, Brazil/Russia/China, is more depressed in price than Canada.

Three stocks with the lowest McDep Ratios of the ten North American companies may have more immediate appreciation potential. Two oil sands producers (hold-rated Suncor (SU) and Petro-Canada (PCZ)), who have trimmed expansion plans, seem to have faced exaggerated selling pressure by panicked investors. A third, small cap independent, Birchcliff Energy (BIR.TO), has built a large Montney formation unconventional natural gas resource position that appears little recognized in a stock price down by three-fourths in a few months. Meanwhile, investors with fixed dollar denominated assets have a better opportunity to diversify as there is more bang in Canadian energy real assets for the U.S. buck. Though highly leveraged financial players may not be back for awhile, their buying power is being replaced by massive government borrowing globally to boost economic activity and indirectly reignite stock market appreciation.

Originally published on November 25, 2008.

Comments

[beabaggage:]

CN $ appreciating now too, the strongest currency in the world with their fiscal responsibility. Alberta taxing to come down. who knows maybe when they dump Harper the SIFT tax will go or be modified, you can't have rising taxes on retirees who own most of the CN Trusts when there is recession.
Oh Canada, Glorius............

2008 Dec 18 10:09 AM