Eric Nuttall’s Top Picks for May 15, 2026

Eric Nuttall, Partner & Senior Portfolio Manager at Ninepoint Partners

Focus: Energy stocks

Top Picks: Cenovus Energy, Strathcona Energy, Whitecap Resources

MARKET OUTLOOK:

The world faces the worst energy crisis in history and the price of oil is set to spike imminently.

Buffered by several safety buffers over the past 75 days (Strategic Petroleum Reserve release, elevated inventory starting point, oil in transit), the market has been lulled into an unbelievable false sense of safety. Reality is about to bite.

Safety buffers have now been exhausted and demand is about to seasonally inflect upward. Our best advisors believe the Strait of Hormuz will remain shut and curtailed for many more months, yet even if it opened up in July the world would still forfeit 1.8 billion barrels of crude oil. At a net seven to eight million barrels per second deficit we think global inventories will reach levels at which the global refining system begins to break around July 1.

The only near-term solution is demand deferral via price discovery, which points to an oil price in excess of US$150 per blue barrel. Medium term, the “day after” as we call it, we believe the floor price for oil will be US$80 per barrel for West Texas Intermediate (WTI) crude oil as the largest inventory draws in history (commercial plus Strategic Petroleum Reserve) will need to be replaced (approximately 400,000 barrels per day of oil of new demand for the next three years), and we see the potential for approximately 700,000 barrels of oil per day of productive capacity damage due to the forced shut-in of 13 million barrels per day of Middle Eastern production.

With that background, “we remain bullish” on Canadian oil stocks and generally see 50 per cent or more potential upside from current levels.

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TOP PICKS:

Cenovus Energy (CVE TSX)

Cenovus Energy offers everything an oil bull could want: exposure to refining which has its highest profit margin in history, top decile and long-life oil inventory able to sustain production for 30 plus years, and a wildly accretive acquisition last year (Monoethylene Glycol) which at the current oil price could pay out by the end of the year. Trading at just 5.8 times 2027 EV/CF it is at a discount to both its Canadian and global peers, which we believe is unwarranted. We think fair value is eight times 2027 equal US$58 target, equal 40 per cent potential upside at US$80 WTI though longer term we see meaningful upside to that.

Strathcona Energy (SCR TSX)

Strathcona will grow production by approximately 50 per cent over the next four years while generating excess free cashflow of approximately US$900 million per year which we expect to be paid in the form of a special dividend (nine per cent yield). By 2030, the company will be able to sustain production by about 50 years while paying out a 18 per cent dividend yield at US$80 WTI. We think fair value equals seven times equals US$67 target equals 48 per cent upside but we see meaningful upside beyond that with the passage of time.

Whitecap Resources (WCP TSX)

Whitecap continues to drill some of the most economic wells in Canada, with 25 plus years of high quality inventory in the Montney and Duvernay. We think it will be the key recipient of funds flow as ARC Resources shareholders sell and want to get new Montney exposure. Trading at 4.7 times EV/CF at US$80 WTI we think fair value equals seven times equals approximately US$25 target equals 54 per cent potential upside.

PAST PICKS:

Expand Energy (EXE NASDAQ)

Then: US$114.92

Now: US$97.34

Return: -15%

Total Return: -12%

Nuvista (NVA TSX)

Then: $14.08

Now: $19.04

Return: 35%

Total Return: 35%

Tamarack Valley (TVE TSX)

Then: $4.36

Now: $12.90

Return: 196%

Total Return: 199%

Total Return Average: 74%