Manager argues that the energy sector is on a firmer footing

“There will be growth in populations and economic growth, that will ultimately benefit energy investors,” says 1832’s Jennifer Stevenson

Michael Ryval 14 March, 2019 | 2:00PM
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With the exception of 2016, it’s been five long years of misery in the energy patch. Yet energy specialist Jennifer Stevenson argues that the sector is now on a firmer footing and there is some cause for optimism. Moreover, given the macro-economic fundamentals, prospects are looking up for investors who have patiently waited for a turnaround.

“When you look through the noise in the market, which is often caused by concerns about China trade wars or about economic growth, and you actually calculate things like supply and demand and costs, it [energy] is a very healthy business,” says Stevenson, Calgary-based vice-president at 1832 Asset Management LP, and lead manager of the 4-star, gold-rated $244.9 million Dynamic Energy Income Series F.

“We have been through a long enough downturn that any excesses or unnecessary costs are well and truly cut out of the business. It can generate free cash flow at what are deemed to be low commodity prices. At US$45-55 West Texas Intermediate [WTI] per barrel, good companies can generate free cash flow. That is entirely different from what we had 10 years ago. They are making more money at a lower price because their costs have fallen.”

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Securities Mentioned in Article

Security NamePriceChange (%)Morningstar Rating
Suncor Energy Inc23.16 USD0.00
TC Energy Corp55.15 USD1.30Rating

About Author

Michael Ryval

Michael Ryval  Michael Ryval, a regular contributor to Morningstar, is a Toronto-based freelance writer who specializes in business and investing.

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