Eric Nuttall’s Top Picks for March 26, 2026

Eric Nuttall, Partner and Senior Portfolio Manager, Ninepoint Partners

Focus: Energy stocks

Top Picks: Strathcona Resources, Whitecap Resources, Ovintiv

MARKET OUTLOOK:

We face the gravest energy crisis of our lifetimes. Global oil production is down 11 million barrels per day, flows are down 17 million barrels per day , and liquefied natural gas (LNG) flows are down 20 per cent, with a three to five year forward loss of at least 3.5 per cent.

The Strait of Hormuz will eventually open, it has to for the world to function, and the breaking point is nearing. The final ships that were able to make safe passage are arriving at port now, meaning the real supply loss has yet to be felt.

Expect product shortages soon in large parts of the world, especially in jet fuel and diesel.

What happens when the Strait eventually opens? The “day after” as I call it? We expect an enduring risk premium of at least US$10 per barrels of oil to embed in the oil price, and the floor price for oil has risen as global oil inventories will hit multi-year low levels by the end of next month (in contrast to expectations of a global oil glut just a month ago).

In the short-term, we expect oil to hit all-time highs within a month should Strait of Hormuz flows not meaningfully improve, and when they do, we think a US$70 to $80 barrels of oil floor is likely. What realities has the war not changed?

The twilight of U.S. shale, the peaking of non-Organization of the Petroleum Exporting Countries (OPEC) production, and the insignificance of 1.5 million barrels per day of OPEC spare capacity given that in the future most of it can be neutralized with a US$30,000 drone.

At US$80 West Texas Intermediate (WTI), the near average price over the next two years, we see meaningful upside in Canadian oil stocks which our fund is now almost 100 per cent exposed to. Free cashflow yields approach eight to 16 per cent and trading multiples well below historical averages, offering by our estimates 35 to 105 per cent potential upside over the next several years in particular stocks that have asset duration, record strong balance sheets, security of supply, and meaningful return of capital. We remain bullish.

• 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:

Strathcona Resources (SCR TSX)

Strathcona Resources has mega-asset duration with over 50 years of stay flat oil inventory at a time when the world is short oil and U.S. shale companies face inventory depletion. Trading at 3.2 times 2027 cashflow at US$80 WTI, we see the company further compressing their trading multiple by growing production by over 50 per cent over the next five years.

We believe that at US$80 WTI the stock can more than double as it is trading at 1.8 times 2030 cashflow and given asset duration we think a seven times target multiple is appropriate.

Whitecap Resources (WCP TSX)

Whitecap Resources has well over 25 years of premium stay-flat inventory in the Montney and Duvernay and continues to drill top decile wells. Lagging this year (up only 28 per cent) we see the stock as materially undervalued, especially given a very strong management team, top decile assets, and a sustainable five per cent dividend yield. Our target multiple is seven times 2027 enterprise value to cash flow (EV/CF) at $80 WTI equals US$25 target price, equals 70 per cent plus potential upside.

Ovintiv (OVV TSX)

Ovintiv recently stole Nuvista from us near a cyclical low oil price, to their now benefit. With 10 plus years of drilling inventory in the Permian and over 20 years in the Montney, we believe the company can emerge from their “hedge fund hotel” status to become a more institutionally owned name. Trading at 3.8 times 2027 EV/CF multiple and a 16 per cent free cashflow yield, and now returning 75 per cent of free cashflow to shareholders, we believe a six times target multiple is appropriate equals about 50 per cent potential upside.

PAST PICKS: APRIL 15, 2025

Nuvista Energy (NVA TSX) - acquired by Ovintiv Feb.is ther 3, 2026

Then: $11.57

Now: $19.04

Return: 65%

Total Return: 65%

ARC Resources (ARX TSX)

Then: $25.70

Now: $29.54

Return: 15%

Total Return: 17%

Athabasca Oil (ATH TSX)

Then: $4.60

Now: $9.87

Return: 115%

Total Return: 115%

Total Return Average: 66%