The Canadian oil and gas sector is absolutely filled with dirt cheap companies in very precarious situations, providing plenty of potentially interesting situations for value investors in the months to come. I say "potentially" because we really need to see how bad things get here before jumping in, in my opinion.
Seven Generations (TSX:VII) is a producer of mainly condensate as well as natural gas, two commodities which have been hit along with pretty much all commodities of late due to the serious global demand shock stemming from the COVID-19 outbreak, as well as the global oil and gas supply shock relating to the Saudi/Russia clash over production levels.
That said, natural gas is expected to outperform other comparable commodities over the next year, according to some analysts, and condensate has actually traded at a premium to WTI in recent weeks, making Seven Generations an intriguing option right now, in my view.
My suggestion and recommendation for all investors right now is to build a watch list of the stocks one likes from a fundamentals and balance sheet point of view, and hold off on any purchases until we see these extremely high levels of volatility subside.
My belief is that we’re still months away from seeing a deep enough reduction in volatility to get in, so having that watch list ready to go will allow for optimal confidence when the time comes to rebuild one’s portfolio.
Invest wisely, my friends.
