Oh boy - oil sands.
The Canadian oil sands sector has been ravished, hit by a flurry of headwinds that most Canadian investors and analysts did not expect.
This beating has seen more vicious than even I (a bear on the sector) expected, paving the way for bears and bulls alike to pick over the sector and attempt to find some value in the heap of beaten up stocks out there.
Canadian Natural Resources Ltd. (TSX:CNQ) is one of my top picks in the oil sands sector, in part due to the company's recent acquisition of $2.8 billion worth of oil sands production capacity from giant Devon Energy Corp. (NYSE:DVN) earlier this year.
This purchase was, by many accounts, very reasonable from a price perspective, and positions CNQ as a top two player in the oil sands space, with Suncor Energy Inc. (TSX:SU) the only player with more capacity (narrowly so).
Canadian Natural has a well-diversified portfolio of revenue streams, and the company's play to buy more Canadian oil sands assets at a time when the industry is beaten to a pulp makes sense from a number of angles.
I like the potential for CNQ to vertically integrate these assets with petrochemical and plastics growth which I expect will provide the majority of the future growth oil sands companies will see in the coming future.
This is a slightly more risky play than other value picks I've had in the past, due to the overhang which remains around oil sands in general, but for long term investors with patience, this could be an excellent buy at current levels.
Invest wisely, my friends.
