Energy Digital has previously reported on the oil and gas debate, as well as the rising solar power industry. And while both industries offer viable stock options, when it comes to stocks, there are two games to play: the “waiting until an industry rebounds” game or the “capitalize on short-term expectations that are driving down quality stocks” game.
According to a new report by Motley Fool, one of these stocks that investors should be paying attention to is Suncor Energy Inc. The stock is down by 20 percent over the past 12 months (as of September 11, 2015) and insiders believe Suncor has a promising future, generating shareholder value over the next three to five years.
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Strong financial footing
Suncor Energy’s financial position is rated “A-” by Standard & Poor’s and “A3” by Moody’s, states Motley Fool. In the first half of 2015 it generated nearly USD$800 million in free cash flow. It also has roughly USD$5 billion in cash as well as a USD$6.9 billion credit revolver.
Decreasing production costs
For the first half of 2015 the company’s cash operating cost was USD$28 per barrel, down from USD$35 per barrel in the previous period. In addition to lower operating expenses, volume growth and cost-reduction programs are largely to thank for the condition of the balance sheet.
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A few projects are expected to come online and help drive production growth in Suncor’s near future.
The Fort Hills project will deliver its first oil in Q1 2017, with a potential of 73,000 barrels a day of production, reports Motley Fool. Another similarly sized project, in which Suncor Energy has a 22.7 percent stake, is also likely to come online by the end of 2017.
Suncor Energy Inc. is in a rare position with its falling costs, balance sheet and upcoming projects. While the oil and gas industry is uncertain in the short-term, Suncor Energy is proving to be a viable choice for long-term growth.
[SOURCE: Motley Fool]