Stock picks: Tourmaline Oil Corp. and Bombardier

Carr Lanphier, Associate Equity Analyst, says that Tourmaline Oil Corp. is now trading materially below its intrinsic value and that's why it's on The Canadian Core Buy List.

Carr Lanphier 13 December, 2013 | 2:00PM Ashley Redmond
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Ashley Redmond: I'm Ashley Redmond for Morningstar.ca, and I'm on the line with Carr Lanphier, Associate Equity Analyst in Chicago.

Carr, thanks so much for joining me.

Carr Lanphier: Thanks for having me this morning.

Redmond: Every month you put together two really useful lists for Canadian investors, The Canadian Income Buy List and The Canadian Core Buy List. So let's start with the Core list. What stocks did you add this month?

Lanphier: So, we added Tourmaline this month, which is an interesting company that we're pretty excited about.

Redmond: Okay. So what really stood out about this company for you?

Lanphier: So, we recently raised its fair value, and it’s now trading materially below where we think it's intrinsic value is. Tourmaline is an oil company that specializes in natural gas and has a lot of assets that allow it to be a low-cost producer that we think are pretty attractive.

Redmond: Okay. And every month you also take companies off of this list. So, what companies fell off the list this month?

Lanphier: So, we removed Thomson Reuters, Power Financial Corporation, and the Canadian National Railroad.

Redmond: And when you take a look at this list overall, how did it do?

Lanphier: So, our Core list did pretty well this month. It actually rose by 2.3%, which was much better than the benchmark, which only rose 80 basis points.

Redmond: Okay. And looking at the Income list, what companies did you add?

Lanphier: So, we added Bombardier and Pembina this month, and we think that these are very attractive companies.

Redmond: And what really stood out about those companies?

Lanphier: We think that these companies are particularly attractive based on their yield. Bombardier is currently on both of our lists actually, which we think is an interesting dynamic. It caters to both the aerospace industry and the railroad. It's the leader in light freight, which is an interesting element when you add in the yield as well.

Redmond: And what companies fell off the list this month?

Lanphier: We actually had the same three companies, Thomson Reuters, the Canadian National Railroad and Power Financial Corporation.

Redmond: And does that usually happen with these lists?

Lanphier: No, that was kind of just a coincidence this month. Those were particularly well performing stocks this month, and due to their appreciation, we thought they were fairly overvalued.

Redmond: Thanks so much, Carr.

Lanphier: Thank you very much.

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Securities Mentioned in Article

Security NamePriceChange (%)Morningstar Rating
Bombardier Inc Registered Shs -A- Multiple Vtg Conv89.61 CAD3.94
Pembina Pipeline Corp49.20 CAD-0.75Rating
Thomson Reuters Corp226.25 CAD-0.89Rating
Tourmaline Oil Corp60.55 CAD-2.96

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Carr Lanphier

Carr Lanphier  

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