Suncor Energy Inc. (USA) (NYSE:SU) — On Nov. 22, I placed SU on my trading list at $32 with a target of $38. But this volatile energy stock surprised me, falling to under $30. However, it reversed up at just under $30, opening a gap from $30.28 to $31.36 as it jumped to over $33 in two sessions.
Since then it has been consolidating in a small pennant at about $32. However, since gaps of this nature tend to fill, try to buy SU stock at $31 in an attempt to again trade it to $38.
The 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.
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 President-elect Donald Trump has assured approval of the completion of a pipeline from the U.S. side.
Until then, rail service will suffice to keep transportation costs low.
Despite projecting a loss per share of 20 cents U.S. in 2016, earnings in 2017 are expected to increase to U.S. $1.20 along with a significant rise in cash flow. S&P’s 12-month target price for SU is U.S. $38 plus a dividend of $1.16 for a 2.7% yield.
Buy Suncor Energy Inc. (USA) (NYSE:SU) stock at $31.
Sam Collins is InvestorPlace.com’s Chief Technical Analyst. He has more than four decades of experience in Wall Street firms.
Sam served as a regular army captain serving in West Germany during the Berlin Wall Crisis before joining Merrill Lynch as a futures broker. Since then, he has been a financial adviser, branch manager, regional manager and certified portfolio manager with national and regional securities firms.
Sam used technical analysis as a timing and selection technique with portfolios that he managed. He developed a specific technical analysis technique and timing system called the Collins Bollinger Reversal (CBR) that has received national recognition, and he has appeared on local and national TV as a financial commentator. Sam is also a member of the NASD Board of Arbitrators. Click here to see his latest trades and market insights.