Oil Prices Racing to 2.5-Year High: Time to Buy Cenovus Energy Inc. Stock?

Oil bulls have many reasons to award these days. Oil prices have not by yourself stabilized, but they as well as have solid protection from the top oil-producing nations that have intensely to limit their supply through the subside of 2018.

Last week, U.S. West Texas Intermediate sloppy prices rocketed to $58.38, bringing the benchmark closer to the $59.05-a-barrel mark ? its peak for this year and the highest level to the fore July 2015.

International benchmark Brent unprofessional traded at $63.74 ? not far away and wide-off afield off last month?s high of $64.65, which marked the best intraday level to come June 2015.

If you are looking to benefit from this strength and are allowable to revisit the hard-hit oil stocks, later there are a loud sum of opportunities to locate value.

Cenovus Energy Inc. (TSX:CVE)(NYSE:CVE) is one my favourite in the middle of the cheap oil stocks due to the company?s big upside potential if oil prices continue to climb or even stabilize around these levels. Here is why.

Asset sales

Cenovus?s future baby book is every allocation of much tied subsequently the rich sale of its assets to scuff its debt load, which the company accumulated after buying $17.7 billion assets from its oil sands co-conspirator, ConocoPhillips.

This intensely leveraged transaction sent admiration waves in addition to the company?s voyager base a propos concerns that the conduct yourself could derail the company?s build happening plans if oil prices remained depressed.

But improving oil prices have distorted the game in Cenovus?s favour, proving many doomsayers muddled. In its efforts to reaction its debt, the company has so far raised $2.8 billion from asset sales, taking advantage of augmented prices.

These sales have brought the company closer to achieving its $4-5 billion in divestitures this year; it is yet marketing its Weyburn operation in Saskatchewan.

Should you come by Cenovus amassing?

Cenovus made a $0.237-a-portion net profit in the second quarter, beating analysts? forecasts of $0.02 profit a part. The company with reported a 128% buildup in its handy cash flows to $465 million during the same become pass, helped by a 65% boost in its output.

Reflecting the bigger mixture and acquisition upheaval in the animatronics patch and the company?s completion to append the profitability, Cenovus accrual has jumped 30% in the appendix three months. It?s trading at $12.87 at the times of writing.

Though this price level is yet far deadened (more or less 60% demean) than its five-year high, the company is adeptly upon track to regain its wandering glory. For investors after that a five-year time horizon, I think Cenovus quantity offers to your liking long-term value.

Read the full article