NIA initially suggested Enterprise Group (TSX: E) on September 18th at $0.16 per share as our top overall pick for the remainder of 2020. On Tuesday, we alerted you to E at $0.25 per share predicting that it will become the market's next big oil play. E finished this week at $0.275 per share its highest weekly closing price in 2 1/2 years. E traded volume this week of 1.449 million shares its highest volume during an up week in 5+ years!
Although U.S. oil companies will reduce CAPEX spending by 20% in 2021, E's Top 3 clients Tourmaline Oil (TSX: TOU), Cenovus Energy (TSX: CVE), and Canadian Natural Resources (TSX: CNQ) are each planning for large CAPEX increases in 2021! Canadian oil companies are beginning to increase their share of global oil production and E is the best way to capitalize!
After major deleveraging in the Canadian oil sector in recent years, the market for specialized equipment rentals in the energy sector is now extremely tight giving E major pricing power. E's trailing twelve month gross profit margins have increased from 14.03% at year-end 2018 up to 35.24% today. The last time E's gross profit margins were this high back in 2014, E exploded to a record high of $3.57 per share!
E insiders have purchased 527,500 shares over the last two months and now own 44% of the company!
Click here to view a presentation about E's brand new Westar Power Systems division, the leading natural gas power generation solutions company catering to Canadian upstream developers! With North America facing a huge shortage of power generators, E deserves to be trading well above its tangible book value of $0.703 per share!
Past performance is not an indicator of future returns. NIA is not an investment advisor and does not provide investment advice. Always do your own research and make your own investment decisions. This message is not a solicitation or recommendation to buy, sell, or hold securities. This message is meant for informational and educational purposes only and does not provide investment advice.