John Stephenson, President & CEO, Stephenson & Company
Focus: North American large caps and resource stocks
Top picks: Canadian Natural Resources, Headwater Exploration, Tamarack Valley
MARKET OUTLOOK:
Despite the trade noise we expect solid performance from the TSX over the balance of the year. Driving solid returns for the TSX is the strong relative value of the TSX when compared with the S&P 500 and an anticipated improvement in earnings for the TSX over the balance of the year.
Should confidence in the earnings outlook improve, as we suspect, this will help drive additional capital flows back into the Canadian market further bolstering overall 2025 market returns.
- Market-moving news, fast: Get the BNN Bloomberg App now
- Sign up for the Market Call Top Picks newsletter at bnnbloomberg.ca/subscribe
TOP PICKS:
Canadian Natural Resources (CNQ TSX)
Canadian Natural Resources reported a very solid second quarter this year with strong mining volumes in July. The company is on track to reduce net debt this year by $2 billion while maintaining similar levels of shareholder returns as in 2024.
It has the lowest breakeven oil price amongst its peers (low $40/bbl range) and has one of the strongest free cash flow profiles in its peer group.
Headwater Exploration (HWX TSX)
Headwaters Exploration has had strong exploration success. The company is a rare pure play company active in the Clearwater (oil and gas) play which is one of the most economic heavy oil plays around.
It has a top-tier inventory position and significant running room ahead to continue to grow. The company has many more years to go given its significant land base for development and exploration on its lands.
Tamarack Valley (TVE TSX)
Tamarack Valley, in its second quarter this year, saw production up and CapEx down, which is a big positive. They showcased record production this quarter with an extensive inventory (Clearwater) and improved guidance.
As the company has repositioned into Charlie Lake and the Clearwater its inventory duration and go-forward profitability has improved.
| DISCLOSURE | PERSONAL | FAMILY | PORTFOLIO/FUND |
|---|---|---|---|
| CNQ TSX | N | N | N |
| HWX TSX | N | N | N |
| TVE TSX | N | N | N |
