Canadian energy sector has been starved for capital for four years: Canoe's Tahmazian
Canada’s energy companies could be primed for a market breakout in 2020, according to one portfolio manager.
“We’re on the edge of extreme profitability for the sector,” Canoe Financial senior portfolio manager and director Rafi Tahmazian told BNN Bloomberg on Wednesday.
“We’re at US$58-to-US$60 oil… If we get an average price of oil next year that hovers around US$63-to-US$65 – a mere five dollars higher – that is all cash to the bottom line, and these companies will look very good.”
The S&P/TSX Canadian Energy Index has lost substantial ground over the back half of 2019, dipping from an April 23 peak close of 170.97 points to a low of 119.71 on Aug. 27. While the index has regained some ground, closing Wednesday at 136.04, shares of prominent energy companies including Encana Corp., Husky Energy Inc., and Vermilion Energy Inc. have all dropped more than 30 per cent in 2019.
Tahmazian said that the trepidation international investors have shown towards Canadian energy makes the sector less prone to vulnerability ahead of his predicted move higher.
“There’s no one in the playground,” Tahmazian said before noting that some stocks such as Calfrac Well Services Ltd. have seen day-to-day volatility on short-selling activity.
“Don’t think that everybody’s watching this sector right now,” Tahmazian said. “It’s completely abandoned.”