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Is cutting their work force a sign that management is doing its best to move forward for the health of its company? Can they recover in today’s market or is CNQ better in the long run? I am an old fashioned Canadian and always follow natural resources. It is a pillar of who we are. We need strong companies for the Canadian economy…Suncor…strong or flagging? Thanks for your input, Dave.

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Asked on October 4, 2020 9:54 am
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Hey Dave. Very good question, as lots of people actually think that when layoffs hit a company stock prices will go down. The thing is, this isn't always the case. In fact when CNR laid off a ton of people in 2019 the markets actually reacted positively.

I'm bearish on the sector in general. When the markets were flooded in 2014-2015, I still had faith in the companies. But when it happened again in 2020 and then to add salt to the wound COVID-19 hit, I realized I don't really want my money to be exposed to a commodity that is so easily manipulated. The fact of the matter is, as investments the 3 major oil producers here have been horrible over the last 15 years. In fact, since 2007 Suncor has returned (on a dividend adjusted basis) -56.9% to investors while the TSX has returned +25.3%.

These are solid companies. There's nothing wrong with Suncor or Canadian Natural. But they can do absolutely everything right and still struggle because they rely heavily on the price of oil.

It's hard to imagine these companies getting beat up any more than they are (CNQ,SU,IMO) but as we've witnessed in 2020 anything is possible. I hold both CNQ and SU. I plan on moving on once there is a bit of a recovery. The reason I haven't sold them off yet is they make up a very small portion of my portfolio, so I'm not too too concerned with the volatility they present.

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Posted by Dan Kent
Answered on October 4, 2020 10:22 am