John Stephenson, Founder & Oil & Gas Analyst, Granite Point Research
Focus: North American oil, gas and utility stocks
Top Picks: Surge Energy, Kelt Exploration, Highwood Asset Management
MARKET OUTLOOK:
We expect choppy gains for the balance of the year for the Toronto Stock Exchange (TSX). We believe that the tariff dispute could present a significant overhang in the short-to-medium term for the TSX.
We also note that the U.S. 10-year Treasury note yield has backed up and now sits at 4.63 per cent.
We believe that in markets that present above-average risk, security selection is key and would advise investors to select securities that are trading at a discount to their peers and have identifiable catalysts.
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TOP PICKS:
Surge Energy (SGY TSX)
Surge Energy has some of the industry’s best performing wells at its Sparky and Frobisher plays.
The company is focused on maximizing free cash flow and providing long-term stable growth in shareholder returns, backed by disciplined capital allocation and long-term decline management.
Surge has strong 2026 momentum and higher growth that is attractive to investors.
Inexpensive valuation and off-the-radar name.
Kelt Exploration (KEL TSX)
Kelt Exploration offers a compelling combination of scale and capability, anchored by an extensive Montney land base and growing gas processing capacity.
Transitioning from an exploration-led approach to a more manufacturing-style development program.
We believe it should experience top-quartile growth over the next couple of years.
Focused on production of crude oil and natural gas in west-central Alberta and northeast B.C.
Highwood Asset Management (HAM TSX)
An oil weighted producer with key assets focused on the Brazeau area of Alberta.
Recent sale of its Wilson Creek assets has significantly improved the balance sheet – Net debt moves to approximately $15 million (down from $114 million) – which affords the company substantial financial flexibility.
Highwood has recently announced its inaugural normal course issuer bid a strong vote of confidence in its shares by the board of directors.
Inexpensive valuation with multiple catalysts to move the stock higher.
| DISCLOSURE | PERSONAL | FAMILY | PORTFOLIO/FUND |
|---|---|---|---|
| SGY TSX | N | N | N |
| KEL TSX | N | N | N |
| HAM TSX | N | N | N |
PAST PICKS:
Canadian Natural Resources (CNQ TSX)
Then: $41.20
Now: $63.92
Return: 55%
Total Return: 61%
Headwater Exploration (HWX TSX)
Then: $6.87
Now: $12.92
Return: 88%
Total Return: 95%
Tamarack Valley (TVE TSX)
Then: $5.32
Now: $13.20
Return: 148%
Total Return: 151%
Total Return Average: 56%
| DISCLOSURE | PERSONAL | FAMILY | PORTFOLIO/FUND |
|---|---|---|---|
| CNQ TSX | Y | N | N |
| HWX TSX | Y | N | N |
| TVE TSX | Y | N | N |
