3 Stocks To Put Under The Tree For Xmas – That Should Payback Nicely
3 Stocks To Put Under The Tree For Xmas – That Should Payback Nicely
Santa!!! Man do I ever love Christmas. Its such a great time of the year. The kids are so excited for it this year and we have plans to meet up with our family’s although not in the huge crowds from a couple years ago. Arg! Bah Humbug
The gifts are all bought, and its time to look into what company to buy for December 2021.
Tops on the list right now gotta be Oil and Gas Stocks. While they have had a monster 2021 I don’t think they are done running and in a market full of overpriced stocks, they are actually pretty cheap.
Now you may say but Rob more lock downs are upon us – look what happened in the past. That’s a risk for sure but do you see things really getting full force locked down again? Will people stand for it? We got those 2 needles, we were told things would get back to normal.
Obviously they aren’t normal but how much does the govt really want to push people. Most studies are showing omni as a very aggressive spreading covid but pretty mild. South Africa have already said hospitalizations have peaked. I think its time to ignore case numbers and focus on hospitalizations it should be the only thing that matters. Why are we freaking out if people test positive but only have the sniffles?
Anyways we just got news that Canada is implementing new covid payments once again. The money printers gotta start up (did it even stop) again and we will continue to see increased inflation.
Its probably a good idea buying companies that can definitely pass those cost increases onto customers or buy the commodities themselves. As a hedge to rising inflation.
The last couple years govts have been beating down oil and gas and with crude oil so cheap a while back, there was less exploration for new rigs and also less companies putting out oil. Here we are with wti over 71$ and Biden begging opec to increase the supply. They refused so Biden thought he could put a dent by releasing 50 million barrels of oil from their strategic reserves, which basically did nothing and will need to be replenished.
British Columbia got hit with a massive storm that closed down the trans mountain pipeline. That forced them to implement maximum 30$ car fill-ups. Showing just how important pipelines are to the economy still.
We also see Europe in a full force energy crisis. Their costs have shot sky high in both gas and natural gas.
Its safe to say oil and gas will be around for a long time until we find more suitable options and that will take years to truly implement.
Eric Nuttall who may be the best go to guy for Canadian Oil and Gas news recently posted this graph. We are now using more oil than we produce from onshore facilities. If that doesn’t scream bullish I don’t know what to say!
Stock #1 Suncor
I started a position in Suncor in October and almost instantly got rewarded with a 100% dividend raise. Suncor is a producer, refiner and seller. We try to buy our gas exclusively from Petro Canada to save 3 cents a litre and get more petro points. The stock got crushed when they cut their dividend earlier this year and hasnt rebounded like CNQ. I feel there is better value buying suncor at these prices vs cnq. Both great companies and will do awesome with oil at these prices.
I always love owning companies I do business with and suncor is definitely one of them. Right now they are making money hand over fist. They plan on paying down debt, raising their dividend and buying back shares. The triple threat right? That’s exactly what you want to see and even better when companies are buying back shares cheap vs at all time highs.
According to Rbc Direct Investing Suncor has
- P/e 19.3x
- Fair value is $37.33 implying 18.33% upside potential from today’s price
- 5.43% dividend yield
- 22 analysts covering su 14 rate buy 2 rate strong buy and 6 hold
I also recently signed up for Mike’s – Dividend Stocks Rock, so I get to see their stock cards. Check out this graph! If you want to Sign up for DSR feel free to use my affliate link. =) It’s worth it and I appreciate the support.
That’s suncor’s free cash flow and I wouldn’t be surprised to see that line go higher next earnings. It’s safe to say this is my top pick of the month.
Stock #2 TC Energy
More energy stocks! Like I said earlier we saw the impact when the trans mountain pipeline got shut down. While tc energy doesn’t own that it just shows how critical pipelines are and I think in the future we will only see more demand for natural gas. Which is tc energy’s bread and butter.
I love to add to this company under 60 bucks a share unfortunately it has popped up a but but it was at 58 just the other day. While they recently lowered their dividend growth policy from 5-7% to 3-5% I think the dividend is still safe and you will collect a solid yield. Some projects have come over budget which of course isn’t ideal.
They are seeking 15 billion from the Biden administration since they cancelled keystone xl right when he came into power. (I’m pretty sure he would love that oil now though right?) If they get that, they could put a lot towards their debt and new projects. While growth may be slow in the coming years, the price is good and you get paid to wait.
- P/e 30.2 really high atm but forward p/e is 13.85
- Fair value 64.12 (6.82% upside)
- Dividend Yield – 5.85%
- 22 analysts 1 under perform 11 hold 8 buy 2 strong buy
While its not a screaming buy, 1k put into trp would enable us to drip one more share a quarter and with an ex dividend date of December 30th I could get the dividend next month.
Stock #3 – Manulife Financial
Manulife still continues to stay around 23-24 bucks a share even after their recent 18% dividend increase. One of the best ways to fight inflation is to raise interest rates. There is more and more talk of governments doing that in 2022 and that will be fantastic for Manulife. I think mfc has been making a lot of the right moves in the insurance industry especially by doing more and more stuff online but yet the price hasn’t rose.
While Canadian Banks are another option to ride the rising interest rate trend I don’t think they are as good of value at the moment. Here’s hoping some of the covid related news pulls them back a bit, I’d love to continue to grow our National Bank position. Meanwhile Manulife is one of our smaller holdings, so I always like beefing them up.
- P/e ratio – 6.9x
- Fair Value $26.67 (13.09% undervalued)
- Dividend Yield 4.76%
- 14 analysts 1 under perform 4 hold 5 buy 3 strong buys
Well there it is. The top 3 stocks on our watch list for December 2021. I’ll keep an eye on them the next couple days but feel really good about adding to suncor before their next earnings. The only thing I don’t like about adding to energy is the political landscape and narrative.
While Id love a world fully renewable I just don’t see us being there at the moment especially in Canada. Our panels only brought in 66 bucks this month, so I don’t think that’s a practical option until we can come up with an option to store that much energy over the summer months. Our next car will most likely be electric, but hopefully that’s not for another 5 years. =)
Whats your thoughts on this list? What are you looking at buying currently?
I wish you all a very Merry Christmas full of smiles, excited kids, family and great food. Ho Ho Ho!
Hey I’m Rob, creator of Passive Canadian Income.
In 2011 me and my wife had almost $60,000 in debt and a negative $7,000 Net Worth. Through hard work and financial education we paid all that off. Now we are focusing on increasing our Passive Income Streams to make the money work for us. Feel Free to Follow along the Journey by clicking the Social Media links below or subscribing to get notified of new posts on the sidebar.
I keep adding to Manulife. Almost up to 500 shares now. Will continue to add when I can
you sir are a boss.
haha 500 is awesome. Eventually =)
Did you see the xaw payment announcement not official yet but I think they are aiming for .42 cents. huge increase!
Two out of three ain’t bad.
Already own TRP and MFC.
Merry Christmas to you and your family.
Merry Christmas to you and yours as well
Sounds like you had great Christmas plans as well. Ours was a great one this year, with everyone happy with their gifts and with plenty of time to spend together.
I don’t have any of the companies on your list, but I’ve looked at SU a number of times. Definitely one of the better run oil and gas companies out there. May have to add it to my shopping cart one of these days.
hey Ryan glad to hear! our christmas kinda fell through as ppl were sick so it was just me the wife and the kids.
Deifnately different but with all the new toys there was lots to do.
I just bought more suncor and may continue grabbing more when oil is this high.
cheers man happy new yrs!
Checked out your site for the first time in a couple weeks and was not expecting 4 new/updated articles, thanks for the good reads Rob!
I’ve got a solid chunk of Manulife and much like AQN have a hard time not buying more based on where it’s sitting. I’ll probably pick up some more MFC this month…
I haven’t owned Suncor since 2018 but have been tempted to buy back in since March 2020. Just never pulled that trigger. Totally agree with your sentiments on oil, green energy is great but it’s not reliable as a base load right now. So many people don’t understand that if we shut down all oil and gas extraction tomorrow, humans would be in serious trouble. Electric cars are great until they’re being charged with electricity generated by a coal burning power plant…
Conclusion, might be time to buy some more SU 😂
I’ve tried to up my game in this regard. I know once a month posts weren’t really that good, especially when they are just portfolio income updates. Suncor is going to have such good earnings this quarter, I really wonder how much the stock will pop. I bought more of them in December.
I plan on continuing to grow mfc until at least 100 a quarter. This month the plan is to grab some more couchetard in the kids resp. We have some money sitting in there from dividend buildup but couldn’t contribute anymore, will be nice to get that cash to work.
Great company and one of the highest dividend raises as a % last year for us, one of our smallest positions though.
Thanks for sharing. I think all the world moves toward renewable energy. So long long perspective for oil is negative, for natural gas probably better. Out of three companies mentioned Manulife is better choice because of the financial sector the company belongs to, but I do not like revenue growth is almost zero for the coming years. I have just sold my holding in SU, moving money to semiconductors, financial and consumer cyclical sectors.
I agree in the long long perspective oil will not be as needed, but that’s quite a ways out there imo.
I think semiconductors and tech in general should do well in the future. Actually txn is starting to get tempting to be honest.
What stocks are you considering in cyclicals?
Hi Rob, my best investment is Domino’s Pizza (DPZ) +267% and $712 in dividends over about 4.5 years, it still looks good. The followings are on my watch list:
Lululemon Athletica Inc (LULU)
D.R. Horton Inc (DHI)
Alibaba Group Holding Ltd (BABA)
From semiconductors sector as you mentioned TXN, and MU, TSM, AMAT, AMD.
haha Domino’s has been fantastic. Those numbers look alot like our bep holdings.
Lulu is kinda surprising, like it because of mirror?