Canadian Oil stocks are not quite behaving in tandem with their American counterparts, as evidenced by less robust share prices and more modest earnings growth prospects. Slightly more than two weeks ago, according to a CNN Money story, a Credit Suisse analyst recommended that investors take a “defensive” stance where major Canadian oil stocks were concerned, due to the strength of the Candian dollar and the limited prospect of positive upside growth.
In a recent related CNN Money-Dow Jones Newswire story, Canada’s Syncrude production was halted due to freezing conditions in the Canadian oil-sands mines, which are expected to produce over 300,000 barrels of light, sweet crude a day. Petro-Canada (NYSE: PCZ), with a market cap of around $23 billion, (Exxon-Mobil, NYSE: XOM, has a $484 billion market cap, by contrast), is one of the major Canadian oils that operates in the joint venture near Fort McMurray, Alberta.
With American big oil companies such as Exxon-Mobil and ConocPhillips (NYSE: COP) showing robust profits and its share prices still trading at relatively strong stock prices, Petro-Canada and the other Canadian oils are not a part of this upsurge. Petro-Canada shares trade at around 47 on the NYSE, with a 52-week range of 34.84-61.18. Its earnings growth is slowing markedly, as it earned $2.93 per share in 2006, $4.87 in 2007 on net income of $1.5 billion (an increase of 66.2%), and is expected to profit $5.58 a share in 2008 with minimal prospects for growth in ’09 to $5.84. Petro-Canada recently announced two oil-drilling discoveries by its exploration units, one in the North Sea in UK waters, and one in Trinidad-Tobago.
Imperial Oil (AMX: IMO) is another major Canadian oil company also involved in the Canadian oil-sands joint venture, and it is trading similarly to Petro-Canada. It has a $45 billion market cap and last year’s net income was $2.6 billion, It too is projecting modest to flat earnings growth over the next two years. The stock has traded in a one-year range of 33-61 and was recently at 49.
Momentum players see flat charts with no upcoming pop or breakout, while value investors may want to wait before they begin building a long-term position on these shares.
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