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BofA Securities’ New York-based energy analyst Asit Sen covers 30 large cap oil and gas stocks across North America, but his list of top picks for 2021 is dominated by Canadian names.

Mr. Sen sees “an emerging Canadian advantage” in the sector that he believes will see domestic companies outperform.

He has four top stocks picks as the year begins and two of them – Canadian Natural Resources Ltd. and Suncor Energy Inc. – are Canadian (the others are Diamondback Energy Inc. and Ovintiv Inc.).

The analyst cites the sustainability of free cash flow as the primary reason he’s urging U.S. investors to look north of the border for oil and gas plays. Mr. Sen estimates that lower fixed costs leave domestic energy companies with a free cash flow yield more than 4.0 per cent higher than U.S. shale drillers.

Oil inventories in Canada are lower and export bottlenecks are easing, according to Mr. Sen. He notes there has been progress on export pipelines, with the capacity expansion for the Line 3 Replacement Program between Alberta and Wisconsin set to begin and the continuation of the Trans Mountain Expansion project.

The analyst expects increasing investor sensitivity to ESG (Environmental, Social, and Corporate Governance) issues will remain a headwind for the sector. However, he notes that Canada has a much better national ESG ranking than most oil producing nations – the U.S., Brazil, Russia, Mexico and Saudi Arabia in particular. Domestic energy companies have undertaken far more initiatives to limit environmental damage than U.S. firms, and B of A sees them “relatively well ahead in the journey towards a cleaner future.”

Mr. Sen has a 12-month price target of $40 for Canadian Natural Resources and a $29 target for Suncor. The stocks started Wednesday trading at $33.66 and $23.13, respectively.

-- Scott Barlow, Globe and Mail market strategist

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Ask Globe Investor

Question: Back in the summer I purchased shares of Brookfield Renewable Partners and between then and now they soared upward 50 per cent. But this morning [as of when this question was submitted], instantly, they have fallen the same amount. I’d love to understand what happened! - James

Answer: BEP announced some time ago that is would implement a 3-2 stock split on Dec. 11. Its corporate equivalent, Brookfield Renewable Corporation (BEPC), went the same route. This means investors received a half unit of BEP.UN for each one previously owned. So, if you owned 100 units before, you now have 150. The same applies to BEPC shares. The share/unit prices were adjusted accordingly, as was the dividend.

-– Gordon Pape

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Compiled by Globe Investor Staff