Petro-Canada, Imperial Oil, Suncor Looking Better than the Past Nine Months

The stocks of buy recommendations Imperial Oil (IMO), Petro-Canada (PCZ) and Suncor (SU) are trading above their 200-day averages again for the first time in more than nine months. While stock price is the catalyst for us to restore our buy recommendations, low McDep Ratios provide the fundamental rationale.

Presuming that the pending acquisition of Petro-Canada by Suncor becomes final in the third quarter, we value the two securities in a combined entity. On that basis, a share of PCZ stock today would be equivalent to 1.28 shares of SU. On its closing price of US$36.84, PCZ is equivalent to buying SU at US$28.78. The discount to SU’s closing price of US$29.77 is a measure of the risk that the deal does not close. Finally, investors in Imperial can look forward to an analyst presentation in New York on May 27.

Originally published on May 8, 2009.

Comments

[User 418375:]

I agree. the economy is heating uup

Jun 16 09:35 AM

[PutneyHillYank:]

Well I not so sure I think PCZ is a great value as is.

Jun 16 10:19 PM