Skip to main content
analysis

On today’s Breakouts report, there are 14 stocks on the positive breakouts list (stocks with positive price momentum), of which nine are energy stocks and four are gold stocks, and 67 stocks are on the negative breakouts list (stocks with negative price momentum).

Discussed today is an energy stock that is pennies away from appearing on the positive breakouts list – Crescent Point Energy Corp. (CPG-T). Benefiting from a rising oil price, the share price has rebounded sharply delivering one-year, two-year and three-year price returns of 20 per cent, 86 per cent and 598 per cent, respectively.

From a technical analysis perspective, the share price is nearing a major ceiling of resistance around $11.60 (closed at $11.44 on Oct. 18) and may pullback in the near-term.

A brief outline on Crescent Point is provided below that may serve as a springboard for further fundamental research when conducting your own due diligence.

The company

Calgary-based Crescent Point Energy is an oil and gas company with operations in central Alberta and Saskatchewan. In the first half of 2023, 78 per cent of its production stemmed from crude oil and liquids with the balance from natural gas.

In August, management announced the sale of its U.S. assets, agreeing to sell its North Dakota assets to a private operator for US$500-million. As a result, it lowered its total annual average production outlook to between 156,000 and 161,000 barrels of oil equivalent per day (boe/d) down from its prior outlook of between 160,000 and 166,000 boe/d.

In a news release, president and chief executive officer Craig Bryksa said, “Over the last few years, we have taken several strategic steps to optimize our portfolio. This transaction allows us to realize future value for an area with limited scalability while immediately enhancing our financial position and increasing our focus on our core operating areas.”

For 2024, management targets annual average production of between 145,000 and 151,000 boe/d based on development capital expenditures of between $1.05-billion and $1.15-billion. Management expects to generate excess cash flow of more than $1-billion based on an oil price of US$80 (West Texas Intermediate), of which roughly 60 per cent will be returned to shareholders through share buybacks and dividends. By 2028, management targets annual average production of approximately 180,000 boe/d.

Management employs a hedging strategy in order to mitigate risk from commodity price volatility.

On the second quarter earnings call, chief financial officer Ken Lamont stated, “We are about 25 per cent hedged now through the second half of 2023. So I think we’ve built a pretty solid book there. And always just looking to enhance it a little bit. But I would expect us probably not to get past the 30 per cent level. As we look into 2024, we’ve actually started a program now into 2024 into the first half. So we’re going to start chipping away at hedging there. We are looking to kind of get hedged out about a year out in that 20 per cent to 30 per cent level.”

Quarterly earnings and outlook

Before the market opened on July 26, the company reported solid second-quarter financial results. Adjusted funds flow from operations came in at $1.01 per share, four cents above the Street’s expectations. Total production in the second quarter came in at 155,031 boe/day. Also positive, the company repurchased 9.7 million shares and announced a special dividend of 3.5 cents per share payable in Aug. That day, the share price rallied 3 per cent.

On the earnings call, Mr. Bryksa said, “During the second half of this year, we expect to realize the benefits of our recent Montney acquisition and continued momentum in our Kaybob Duvernay play, as we plan to bring on stream additional pads in both areas during the third and fourth quarter. Our second half 2023 production is expected to average approximately 179,000 BOE per day generating over $1 billion of excess cash flow on an annualized basis, assuming a U.S. $75 price deck.”

Dividend policy

The company pays its shareholders a quarterly dividend of 10 cents per share, or 40 cents per share on a yearly basis. This equates to a current annualized yield of 3.5 per cent.

Over the past year, the company has also paid its shareholders three special dividends of 3.5 cents per share each time - in August 2023, March 2023 and Nov. 2022.

Analysts’ recommendations

According to Bloomberg, the stock has 14 buy-equivalent recommendations, one “sector perform” recommendation (from Peters & Co.), and one “underweight” recommendation (from ISS-EVA).

The firms providing research coverage on the company are: ARC Independent Research, ATB Capital Markets, BMO Capital Markets, Canaccord Genuity, CIBC World Markets, Desjardins Securities, ISS-EVA, National Bank Financial, Peters & Co., Raymond James, RBC Dominion Securities, Sadif Investment Analytics, Scotiabank, Stifel Canada, TD Securities and TPH & Co.

Revised recommendations

Since the beginning of September, four analysts have raised heir expectations and target prices.

  • CIBC’s Dennis Fong to $15 from $14.75.
  • National Bank’s Travis Wood to $19 (the high on the Street) from $16.
  • Raymond James’ Jeremy McCrea to $16 from $13.
  • TD’s Aaron Bilkoski to $15 from $13.50.

Financial forecasts

The consensus cash flow per share estimate is $4.33 in 2023 and $4.25 in 2024.

Valuation

The stock is commonly valued by analysts on an enterprise value-to-debt adjusted cash flow (EV/DACF) basis.

Individual target prices provided from 14 firms after the company released its second quarter earnings results in July are: six at $13, $13.50, two at $14, two at $15, two at $16, and $19 (from National Bank’s Travis Wood). The average one-year target price is $14.32, implying the share price has 25-per-cent upside potential over the next 12 months.

Chart watch

Year-to-date, the share price is up 18 per cent, making it the 13th-best performing stock out of 40 stocks in the S&P/TSX Energy Index.

In terms of key resistance and support levels, the share price is approaching an initial ceiling of resistance near $11.60. After that, there is major overhead resistance around $13.50. In terms of downside support, there is strong technical support around $10, close to its 200-day moving average (at $9.86). Failing that, there is strong technical support around $8.

ESG Risk Rating

According to Sustainalytics, the company has an environmental, social and governance (ESG) risk score of 42.4 as of July 6. A risk score above 40 reflects a “severe risk” rating.

Positive and negative breakout stocks 

POSITIVE BREAKOUTSOct. 18 closing price
ARX-TARC Resources Ltd $22.24
BTO-TB2Gold Corp $4.59
BTE-TBaytex Energy Corp $6.04
CJ-TCardinal Energy Ltd $7.79
CVE-TCenovus Energy Inc $29.05
ELD-TEldorado Gold Corp $13.79
ERF-TEnerplus Corp $24.27
HEO-TH2O Innovation Inc. $4.20
IPCO-TInternational Petroleum Corp. $14.10
K-TKinross Gold Corp $7.29
LUG-TLundin Gold Inc $17.73
MEG-TMEG Energy Corp $27.92
OBE-TObsidian Energy Ltd. $11.72
OVV-TOvintiv Inc. $70.24
NEGATIVE BREAKOUTS
ADN-TAcadian Timber Corp $16.47
ARE-TAecon Group Inc $10.30
AFN-TAg Growth International Inc $50.30
AGF-B-TAGF Management Ltd $6.70
AC-TAir Canada $17.13
AQN-TAlgonquin Power & Utilities Corp $7.22
ARR-TAltius Renewable Royalties Corp. $7.39
ATS-TATS Corp. $49.44
BMO-TBank of Montreal $109.44
BLX-TBoralex Inc $27.04
BIP-UN-TBrookfield Infrastructure Partners LP $33.50
DOO-TBRP Inc $97.24
CAE-TCAE Inc $29.50
CF-TCanaccord Genuity Group Inc $7.32
GOOS-TCanada Goose Holdings Inc. $17.44
CP-TCanadian Pacific Railway Ltd $97.26
CS-TCapstone Mining Corp $5.02
CJT-TCargojet Inc $83.75
CCL-B-TCCL Industries Inc $55.25
CIX-TCI Financial Corp $14.17
CCA-TCogeco Communications Inc $59.62
CIGI-TColliers International Group Inc $121.66
CTS-TConverge Technology Solutions Corp. $2.33
CSW-A-TCorby Spirit and Wine Ltd $13.91
CJR-B-TCorus Entertainment Inc $0.88
ECN-TECN Capital Corp. $2.13
EFN-TElement Fleet Management Corp. $18.98
ERO-TEro Copper Corp. $19.91
FTT-TFinning International Inc $38.95
FN-TFirst National Financial Corp $34.67
FSV-TFirstService Corp $191.41
GBU-XGabriel Resources Ltd $0.35
GRT-UN-TGranite Real Estate Investment Trust $69.69
IGM-TIGM Financial Inc $32.33
ISV-TInformation Services Corp $20.57
INE-TInnergex Renewable Energy Inc $9.23
LB-TLaurentian Bank of Canada $26.14
LNF-TLeon's Furniture Ltd. $17.94
LNR-TLinamar Corp $63.71
LAC-TLithium Americas Corp $11.16
MG-TMagna International Inc $70.47
MFI-TMaple Leaf Foods Inc $24.52
MRE-TMartinrea International Inc $11.67
NA-TNational Bank of Canada $86.85
NPI-TNorthland Power Inc $20.61
ONC-TOncolytics Biotech Inc $2.29
ONEX-TOnex Corp $78.45
OTEX-TOpen Text Corp $46.47
PBH-TPremium Brands Holdings Corp $93.35
REAL-TReal Matters Inc. $5.48
RSI-TRogers Sugar Inc $5.26
RUS-TRussel Metals Inc $34.17
SIS-TSavaria Corp. $13.01
SOT-UN-TSlate Office REIT $1.26
SII-TSprott Inc $39.65
STN-TStantec Inc $85.30
STLC-TStelco Holdings Inc. $33.34
SVI-TStorageVault Canada Inc. $4.02
TKO-TTaseko Mines Ltd $1.55
TIXT-TTELUS International Inc. $9.45
TFII-TTFI International Inc. $163.30
TLRY-TTilray Brands Inc. $2.70
TOI-XTopicus.com Inc. $84.01
TIH-TToromont Industries Ltd $106.99
TA-TTransAlta Corp $10.74
TRZ-TTransat AT Inc $3.28
WEF-TWestern Forest Products Inc $0.75

Source: Bloomberg

The Breakouts file is a technical analysis screen intended to identify companies that are technically breaking out. In addition, this report highlights a company’s dividend policy, analysts’ recommendations, financial forecasts, and provides a brief technical analysis for a security to provide readers with more information.

If a stock appears on the positive breakouts list, this indicates positive price momentum, and that a company may be worthwhile for investors to look at the fundamentals in order to determine if the recent price strength is warranted and will continue. If a security appears on the negative breakouts list, this indicates negative price momentum, and may be indicative of either deteriorating fundamentals or perhaps indicates a buying opportunity.

Securities screened are from the S&P/TSX composite index, the S&P/TSX Small Cap index, as well as Canadian small cap stocks outside of these indexes that have a minimum market capitalization of $200-million.

A technical analysis screen does not replace fundamental analysis, but can help identify companies worth having a closer look at.

This report should not be considered an investment recommendation.

Report an error

Editorial code of conduct

Tickers mentioned in this story

Study and track financial data on any traded entity: click to open the full quote page. Data updated as of 28/02/24 11:59pm EST.

SymbolName% changeLast
CPG-T
Crescent Point Energy Corp
+0.41%9.69

Follow related authors and topics

Authors and topics you follow will be added to your personal news feed in Following.

Interact with The Globe