With the majority of commodities sectors taking a broad hit in recent years, many investors who have plowed a significant percentage of their portfolios into commodities have been hit with reduced long-term growth expectations for many core commodities industries Canadian investors hold dear; perhaps hardest hit has been the Canadian oil sands, a market segment plagued by notoriously high operating costs and low margins in an unfriendly macroeconomic environment for the “black gold” commodity.
Many analysts, including myself have pointed to the potential folly investors have in placing too many eggs in any one basket; that said, looking for baskets of stocks, or overall sectors, which have been unduly beaten up by expectations which do not reflect the robust underlying fundamentals of a particular operating business should be given credence.
One such company I will highlight for investors looking to cash in on the recent rise in the price of oil is Suncor Energy Inc. (TSX:SU)(NYSE:SU).
Suncor is one of Canada’s largest independent oil producers, focusing on the Canadian oil sands in the Prairie region of Canada.
This company has a proven track record of profitability, consistently outperforming its competitors on key fundamentals such as operating margins and infrastructure investment, two factors which have the potential to continue to make Suncor an excellent long-term play for long-term oil bulls who believe the recent blip in commodity prices is just that – a blip.
Where oil goes from here, no one is certain; what is certain, however, is that the companies which continue to produce profits near decade-long lows should be given consideration. Act accordingly.
Invest wisely, my friends.
