WCP still a good buy?

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Hi! Before i joined premium i read one of your articles talking about Whitecap resources – WCP – but i can’t find that article now.. i was interested in it since it’s trading so low but is it still a good buy? Any reports/updates?

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Asked on May 29, 2020 8:30 am
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Private answer

Yes, Whitecap was on our best oil stocks to buy page. We removed it in early March because of COVID-19. With the company's high dividend yield, it was inevitable a fall in price and a dividend cut were coming.

Company is cheap when you look at trailing metrics. But, it's important to keep in mind that moving forward we expect oil and gas companies to have significant struggles, junior players more than most. They just announced today that Alberta expects a 7% contraction in the economy moving forward. This is a historic number, it has never been this bad.

Is there upside in Whitecaps price? Potentially. But the company is slashing drilling, its dividend, and spending to preserve its financial position. May take them a while to recover to previous price levels, if at all. I'd also expect some pretty heavy volatility with the company moving forward in terms of stock price.

High risk, high reward play in my opinion.

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Posted by Dan Kent
Answered on May 29, 2020 8:40 am