With The Cheat Sheet saying we should be looking into Oil stocks, Canada’s Suncor (SU) is a stock I will be watching.
Suncor is the first company to develop oil-sands. Mainly an oil company, Suncor has grown to search for, produce and market natural gas and it also has four wind farms.
Suncor sells oil and gasoline under the Sunoco and Petro-Canada brands. Sunoco in the U.S. is a seperate company, owned by Sunoco, Inc of Philadelphia.
One-Year Chart
Looking at the one-year chart on the right, I love the saucer chart pattern SU has formed, this is a bullish sign that the shares are probably headed higher. SU looks to head into 52-week high territory at any time, and with triple-digit growth forecasted for the next two quarters, this stock has the energy to make a move.
I also love the estiamted long-term growth rate of 30%. Profits are expected to grow from $0.88 last year to $1.51, $2.47 and $3.12 annually through 2012.
But this is a comeback story. Suncor made $3.15 in 2008 and is now trying to work back to that number.
Ten-Year Chart
For comparison purposes, from October 2007 through April 2008 SU traded in a range of $45 to $60. Since the company made around $3 in 2008, SU earned a P/E of 15 to 20.
I like the long-term upward move SU made from 2000-2007. The stock crashed during September and October of 2008, like most stocks did.
Still overall SU has compounded at 19% a year — which is pretty strong. In this ten-year view you can see a big cup and handle. With strong profit estimates expected through 2012 I think this stock will breakout and head higher, pushing the yearly stock growth past 20%. Yearly EPS growth has been only 7% for the decade but should no doubt bounce higher next year if the company makes around $2.50.
Conclusion
In the end this is an oil company and if oil rises then the oil will sell for more money. 2011 could be a year for energy and commodity stocks so I will give strong consideration to adding SU to the Growth Portfolio if the stock breaks out past resistance at $37. SU tried to break $37 this week, but closed at $36.
Suncor pays a 1% dividend so this stock is good for income seeking investors.
