Stock of the Day Suncor Energy

[BadBoyBenny]

Anyone who visits the politics board or reads the news has heard the ongoing debate about peak oil, whether it is really something to be worried about, etc. Please don’t debate that here, why I bring it up is the conversation will inevitably lead to someone bringing up the Canadian Oil Sands as a mid term alleviator of oil shortage. Suncor is (to my knowledge) the largest publicly traded company that operates in the Canadian Oil Sands region. It is an integrated petroleum company so it is not completely reliant on the oil sands but it would be in bad shape if they became unprofitable due to a major price drop in oil or environmental regulation.

The Yahoo descripion
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Suncor Energy, Inc. operates as an integrated energy company in Canada. The company produces light sweet and light sour crude oil, diesel fuel, and various custom blends from oil sands mined in the Athabasca region of northeastern Alberta, as well as markets these products in Canada and the United States. It engages in the exploration, acquisition, development, production, transportation, and marketing of natural gas and crude oil in Canada and the United States. The company also manufactures, transports, and markets petroleum and petrochemical products, primarily in Ontario and Quebec. Petrochemical products are also sold in the United States and Europe. Suncor Energy was formed by the amalgamation of Sun Oil Company Limited and Great Canadian Oil Sands Limited under the Canada Business Corporations Act in 1979. It was formerly known as Suncor, Inc. and changed its name to Suncor Energy, Inc. in 1997. The company is headquartered in Calgary, Canada.

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Suncor has had a great run over the last year. Mostly because their costs of extracting oil are way higher than traditional producers, so they are only profitable when oil is somewhat expensive, but have been very profitable with today’s prices, and would be increasingly so if oil continues to rise.

Financials can be found here, I haven’t studied them in over a year so I don't have any analysis to provide now, but will be revisiting this one soon and may post some findings.

I have a feeling most of the investors on this board know of SU and have some opinion. I would like to find out what it is.

[James Boston]

I have never bought, or researched, stocks bought in foreign markets. Are there any factors I should be aware of?

[BadBoyBenny]

I don't really know. The only foreign stock I have bought was with a company I was working for. My guess would be that a canadian company listed on the NYSE would be about as close to a US stock as you could get for a foreign investment. But I have nothing to back that up. Maybe someone more experienced can tell us.

I did not put this in the original post but I do not own SU, I should have bought it when I was looking at it about 15 months ago, but the valuation is a whole different story now. I was hoping to find out if others would still be buyers.

[tek]

Are you in Dan Mezick's stock market tournament?

[BadBoyBenny]

Not yet. I'll sign up for fun though since you asked. My typical investments range more from 1-3 years than 4 months but I'll try it out.

[Dan Mezick]

The SU chart is a textbook example of a strong trend, worth following. I see SU is making an new all-time high.

There is a world of difference between a stock that is challenging an old high, and a stock that is making a new all-time high.

The one making the all-time high is held by mostly happy people, most of whom are holding it to sell at higher prices.

The same cannot be said of a stock that is near but under a previous high.

[laserboy]

Check out Kurt Wulff's site:

http://www.mcdep.com

He does valuations based on the discounted net present value of future oil production. He does some fairly detailed analysis of Suncor among other companies.

You may also wish to consider Canadian Oil Sands Trust (COSWF on the pink sheets) which is a much "purer" play on tar sands.

Canadian Natural Resources (CNQ) and Petro-Canada (PCZ)are two other companies that are big on tar sands and have more attractive cashflow and proven reserve ratios.