Should I swap out my holding in Suncor for CNQ?

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I have held Suncor for years, through thick and thin. I am down nearly 30% from where I bought it, It appears that, by most metrics, Canadian Natural Resources (CNQ) is the better buy. Should I switch or hold on?

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Asked on December 1, 2021 10:55 am
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I certainly view Canadian Natural as the better producer and more efficient company. However, from a forward valuation standpoint, Suncor is cheaper. You're likely looking at trailing valuation ratios. Suncor was impacted by the pandemic much more than Canadian Natural. So on a trialing basis it looks much more expensive. But 2020 is not necessarily a strong year to value oil companies, considering the circumstances.

That being said, Canadian Natural is trading at a Premium to Suncor right now on a forward basis because it is the more efficient producer, and people are likely willing to pay more considering its reliability.

If Suncor can put up some strong performances over the next year or two, it likely has more room in terms of upside than Canadian Natural. However, if it struggles in comparison, there's a chance Canadian Natural could leave it in the dust.

A rebound play in Suncor, or own the best in class producer in Canadian Natural. The choice to switch is ultimately one that you have to make, I can't make it for you.

Keep in mind that owning both is not an outrageous idea.

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Posted by Dan Kent
Answered on December 2, 2021 10:09 am