In this article, we’ll be summarizing a bullish thesis posted on VIC regarding Canadian Natural Resources Limited (CNQ) in late July when the stock was trading at $34.43. Currently, CNQ stock is trading at $34.84, which shows that the stock hasn’t moved much since the publication of this thesis. Nonetheless, CNQ stock is now trading at a forward PE ratio (non-GAAP) of 14.12, and the stock is trading at 2.92 times, forward sales estimates.
With its long-life, low-decline asset portfolio, offering greater flexibility and resilience than conventional exploration and production (E&P) companies; Canadian Natural Resources Limited (CNQ) stands out as a unique investment. The company’s reserves, especially those related to its oil sands assets, allow minimum reinvestment to sustain output, therefore enabling CNQ to save capital during recessionary times and concentrate on free cash flow creation.
The thesis emphasizes how CNQ can control expenses and pursue opportunistic M&A while preserving dividend growth and share buybacks. It highlights CNQ’s remarkable 24-year dividend rise record as well as its dedication to returning all free cash flow to owners beginning in 2024. Furthermore, CNQ’s emphasis on cost effectiveness, using fixed costs in its oil sands activities and funding new technologies has resulted in notable lower per-barral running expenses.
The management of CNQ is commended for keeping financial stability and emphasizing high-return projects by using a rigorous capital allocation approach. Murray Edwards, the executive chairman of the company, embodies its ownership, operational excellence, and long-term planning culture, therefore supporting its exceptional performance.
Although regulatory ambiguity over carbon emissions in Canada still exists, the opening of the Trans Mountain pipeline has helped to clear obstacles, therefore supporting CNQ’s expansion possibilities. Driven by operational efficiency and a strong asset base, the thesis projects low-to- mid single-digit production growth and notable free cash flow creation over the medium term.
Among the catalysts are ongoing share buybacks, dividend hikes, and better opinion of the oil and gas industry. The thesis sees CNQ as a high-quality business with a unique asset base and management team positioned to provide excellent shareholder returns in a turbulent energy market.
Canadian Natural Resources Limited (CNQ) is not on our list of the 31 Most Popular Stocks Among Hedge Funds. As per our database, 48 hedge fund portfolios held CNQ at the end of the third quarter which was 46 in the previous quarter. While acknowledging the potential of CNQ stock as an investment, a few AI stocks hold greater promise for delivering greater returns and doing so within a shorter time frame. If you are looking for an AI stock that is more promising than CNQ but trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
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Disclosure: None. This article was originally published at Insider Monkey.