Suncor Energy Inc. (USA) (NYSE:SU) — A merger with Petro-Canada made this oil and gas producer one of the largest energy companies in Canada. It is focused on Alberta’s Athabasca oil sands and is combined with supporting operations in refining and marketing.
Standard & Poor’s estimates that this company’s production will grow at 6%-8% per year through 2020. Thus on last Thursday, S&P added SU stock to its “Top 10 Portfolio.” They project that operating costs will be aided by an increase in operating efficiencies, low natural gas prices and a weak Canadian dollar.
The company anticipates that more pipelines will be built, and until then rail service will suffice to keep transportation costs low. Despite projecting a loss per share of 20 cents per share (U.S.) in 2016, earnings in 2017 are expected to increase to $1.20 along with a significant rise in cash flow. S&P’s 12-month target price for Suncor stock is $38.
From a technical view, SU consolidated within a five-month channel with support at $25.75 and resistance at $28.75. In mid-October, it broke from the resistance line followed by a continuation gap which was quickly closed on profit-taking. Then, on the S&P upgrade, SU successfully tested the double top at $31.50 and yesterday closed at a new high for the year.
The break through $31.50 triggered a new MACD buy signal, which reinforces the S&P target of $38.
Buy SU stock at $32 or less for a trade to $38 and a proposed return of over 18%. Suncor pays a quarterly dividend currently at 22 cents per share. Due to the high dividend, this stock is appropriate for investors seeking long-term growth and income.
