Santa Claus!!! Man do i ever love christmas It’s such a great time of year. The kids are so excited this year and we plan to meet up with our family, albeit not in the big crowd from a few years ago. Argh! Bah humbug
The gifts have all been bought and it is time to consider which company to buy for December 2021.
Oil and gas stocks have to be at the top of the list right now. Even though they had a monster in 2021, I don’t think they’re done, and in a market full of overpriced stocks, they’re actually pretty cheap.
Now you can tell, Rob, more bans are pending – see what happened in the past. That is sure to be a risk, but do you see things really being locked down again with full force? Will people stand for it? We got these 2 needles, we were told things were going to go back to normal.
Obviously they’re not normal, but how much does the government really want to push people? Most studies show that Omni is a very aggressive spreading covid, but it is quite mild. South Africa has already said that hospital admissions have peaked. I think it’s time to ignore case numbers and focus on hospital stays, it should be the only thing that matters. Why do we freak out when people test positive but only have the cold?
Anyway, we just got the news that Canada is reintroducing new Covid payments. The money printers have to start again (it stopped at all) and we will continue to see rising inflation.
It is probably a good idea to buy companies that can definitely pass these cost increases on to customers, or that can buy the raw materials themselves. As a hedge against rising inflation.
In the past few years, governments have put down oil and gas, and with crude oil being so cheap some time ago, there has been less exploration for new drilling rigs and fewer companies producing oil. Here we are with wti over $ 71 and Biden asks OPEC to increase the offer. They refused, so Biden thought he could make a dent by releasing 50 million barrels of oil from their strategic reserves, which basically did nothing and needs to be replenished.
British Columbia was hit by a massive storm that closed the Trans Mountain Pipeline. That forced them to implement a maximum of $ 30 car refueling. This shows how important pipelines are to the economy.
We also see Europe in an energy crisis with full force. Their costs have skyrocketed in both gas and natural gas.
It is safe to say that oil and gas will be around a long time before we find more suitable options and it will be years before they are actually implemented.
Eric Nuttall who is the best point of contact for Canadian oil and gas news recently posted this graph. We now use more oil than we produce from onshore facilities. If that doesn’t scream bullish, I don’t know what to say!
Stock # 1 Suncor
I started a position at Suncor in October and was rewarded almost immediately with a 100% dividend increase. Suncor is a producer, refiner and seller. We try to buy our gas exclusively from Petro Canada to save 3 cents per liter and get more Petro points. The stock was destroyed when it cut its dividend earlier this year and has not rallied like CNQ. I think buying Suncor at these prices is cheaper compared to cnq. Both great companies and will do great with oil at these prices.
I always love owning companies that I do business with and Suncor is definitely one of them. Right now they are making money by hand. They plan to pay off debt, increase their dividend, and buy back stocks. The triple threat, right? That’s exactly what you want to see, and even better when companies buy back stocks cheaply from all-time highs.
According to Rbc Direct Investing, Suncor
- Price 19.3x
- The fair value is $ 37.33, which means an upside potential of 18.33% from today’s price
- 5.43% dividend yield
- 22 analysts covering Su 14 Rate Buy 2 Rate Strong Buy and 6 Hold
I also recently signed up for Mike’s – Dividend Stocks Rock so I can see their stock cards. Look at this graphic! If you want to sign up for DSR you can use my affiliate link. =) It’s worth it and I appreciate the support.
That’s Suncor’s free cash flow, and I wouldn’t be surprised if that line went up on the next profit. I can safely say this is my top pick of the month.
Share # 2 TC Energy
More energy stocks! As I said earlier, we saw the impact when the Trans Mountain Pipeline was shut down. While tc energy doesn’t own that, it just shows how critical pipelines are, and I think we’ll only see even more demand for natural gas in the future. This is tc energy’s bread and butter.
I love adding below $ 60 a share to this company, unfortunately it popped up but the other day it was at 58. Although they recently slashed their dividend growth policy from 5-7% to 3-5%, I think the dividend always goes is still safe and you will get a solid return. Some projects have exceeded budget, which of course is not ideal.
They are demanding 15 billion from the Biden administration because they canceled Keystone xl when it came to power. (I’m pretty sure he’d love this oil now, right?) If they got this, they could invest a lot in their debts and new projects. While growth may be slow in the years to come, the price is good and you get paid to wait.
- P / e 30.2 really high atm but forward P / e is 13.85
- Fair Value 64.12 (6.82% upside)
- Dividend yield – 5.85%
- 22 analysts 1 below average 11 hold 8 buy 2 buy high
While it’s not a screaming buy, 1k in trp would allow us to drip one more stock per quarter and with an ex-dividend date of December 30th, I could get the dividend next month.
Share # 3 – Manulife Financial
Manulife remains at $ 23-24 per share even after its most recent 18% dividend hike. One of the best ways to fight inflation is to raise interest rates. There is increasing talk of governments doing this in 2022 and that is going to be fantastic for Manulife. I think mfc has taken a lot of the right steps in the insurance industry, especially by doing more and more things online, but the price has not gone up yet.
Canadian banks may be another option to weather the rising interest rate trend, but I don’t think they’re that valuable right now. Hope some of the Covid-related news pulls you back a bit. I would like to expand our position at the National Bank. Manulife is now one of our smaller companies, so I always enjoy building it up.
- P / E – 6.9x
- Fair Value $ 26.67 (13.09% undervalued)
- Dividend yield 4.76%
- 14 analysts 1 below average 4 hold 5 buy 3 strong buys
Well there it is. The top 3 stocks on our watchlist for December 2021. I’ll keep an eye on them for the next few days, but I feel really good about adding to Suncor ahead of their next gains. The only thing I don’t like about adding energy is the political landscape and the narrative.
I would love a world that is completely renewable, but I don’t see us there right now, especially in Canada. Our panels only made $ 66 this month so I think this won’t be a practical option until we have a way to store that much energy over the summer months. Our next car will most likely be electric, but hopefully not in the next 5 years. =)
What is your opinion on this list? What do you want to buy right now?
I wish you all a Merry Christmas, full of smiles, excited children, family and good food. Ho Ho Ho!
Hey, I’m Rob, Canadian Passive Income Creator.
In 2011, my wife and I were nearly $ 60,000 in debt and $ 7,000 in net negative assets. Through hard work and financial education, we paid for all of this. Now let’s focus on increasing our passive income streams to make the money work for us. Feel free to follow along the journey by clicking the social media links below or subscribing to be informed of new posts in the sidebar.