Top picks 2013: Vermilion Energy

This Canadian energy company has proven the ability to weather even the toughest of times.

By TheStockAdvisors Dec 27, 2012 9:36AM
Comstock CorbisBy Roger Conrad, Utility Forecaster

A favorite aggressive pick for 2013 is Vermilion Energy (VEMTF), a former Canadian income trusts producing oil and gas that did not cut dividends either in 2008 when oil prices crashed or when converting to a corporation in 2010.

In fact, it recently raised its dividend, while others in its industry are cutting or eliminating dividends. The 5.3% increase in the payout to a new monthly rate of 20 cents Canadian per unit is the first since an 11.8% bump announced in December 2007.

The company has been able to keep dividends rising in a volatile industry for two major reasons. First, they control their leverage. The company has no debt maturities to meet between now and 2015, and debt-to-annualized cash flow is among the very lowest in the industry.

Second, the company is heavily focused on production of oil and natural gas liquids, rather than natural gas that's been in a downtrend the past five years. Vermilion also draws more than two-thirds of output outside North America; this gas sells for global prices that are several times what gas fetches in North America.

Vermilion continues to add properties overseas in selected countries, including the $86 million purchase of lands in France this month that are complementary to properties it already owns.

The French acquisition was announced at the same time as the dividend increase, and its accretive implications no doubt raised management's comfort level for a boost.

The company is also enjoying strong success drilling light oil in Canada's Cardium region, and is on track for expansion in Australia and the Netherlands as well.

Sometime in the next few weeks, Vermilion plans to list its stock on the NYSE under the symbol "VET."

A global crash in energy prices would obviously have an impact on stocks of energy producers across the board. But perhaps no Canadian company has proven its ability to weather tough times in the past. And that's the key to even bigger returns long term. Buy up to $52.

More from TheStockAdvisors.com
Tags: VEMTF
0Comments

DATA PROVIDERS

Copyright © 2014 Microsoft. All rights reserved.

Fundamental company data and historical chart data provided by Morningstar Inc. Real-time index quotes and delayed quotes supplied by Morningstar Inc. Quotes delayed by up to 15 minutes, except where indicated otherwise. Fund summary, fund performance and dividend data provided by Morningstar Inc. Analyst recommendations provided by Zacks Investment Research. StockScouter data provided by Verus Analytics. IPO data provided by Hoover's Inc. Index membership data provided by Morningstar Inc.

STOCK SCOUTER

StockScouter rates stocks from 1 to 10, with 10 being the best, using a system of advanced mathematics to determine a stock's expected risk and return. Ratings are displayed on a bell curve, meaning there will be fewer ratings of 1 and 10 and far more of 4 through 7.

111
111 rated 1
272
272 rated 2
474
474 rated 3
656
656 rated 4
638
638 rated 5
699
699 rated 6
623
623 rated 7
486
486 rated 8
260
260 rated 9
128
128 rated 10
12345678910

Top Picks

SYMBOLNAMERATING
DYNDYNEGY Inc10
TAT&T Inc9
VZVERIZON COMMUNICATIONS9
EXCEXELON CORPORATION8
AAPLAPPLE Inc10
More

VIDEO ON MSN MONEY

ABOUT

Top Stocks provides analysis about the most noteworthy stocks in the market each day, combining some of the best content from around the MSN Money site and the rest of the Web.

Contributors include professional investors and journalists affiliated with MSN Money.

Follow us on Twitter @topstocksmsn.