Advertisement
Canada markets open in 2 hours 48 minutes

  • S&P/TSX

    21,708.44
    +52.39 (+0.24%)
     

  • S&P 500

    5,011.12
    -11.09 (-0.22%)
     

  • DOW

    37,775.38
    +22.07 (+0.06%)
     

  • CAD/USD

    0.7262
    -0.0001 (-0.02%)
     

  • CRUDE OIL

    82.26
    -0.47 (-0.57%)
     

  • Bitcoin CAD

    88,991.57
    +4,020.48 (+4.73%)
     

  • CMC Crypto 200

    1,334.03
    +21.41 (+1.66%)
     

  • GOLD FUTURES

    2,397.10
    -0.90 (-0.04%)
     

  • RUSSELL 2000

    1,942.96
    -4.99 (-0.26%)
     

  • 10-Yr Bond

    4.6470
    0.0000 (0.00%)
     

  • NASDAQ futures

    17,428.50
    -118.75 (-0.68%)
     

  • VOLATILITY

    19.32
    +1.32 (+7.33%)
     

  • FTSE

    7,827.09
    -49.96 (-0.63%)
     

  • NIKKEI 225

    37,068.35
    -1,011.35 (-2.66%)
     

  • CAD/EUR

    0.6814
    -0.0007 (-0.10%)
     

How Much Upside Does Birchcliff Energy Ltd. (TSX:BIR) Stock Have?

Kay Ng
Updated

Birchcliff Energy Ltd. (TSX:BIR) stock has done very well. Since March, the low-cost, natural gas-weighted (about 80% natural gas) oil and gas producer has appreciated more than 70% from a low of $3 per share. With the stock now hovering around $5 and change per share, it is meeting some resistance.

How much upside does Birchcliff stock have?

The super run-up we’ve seen in the stock in the last few months might make investors pause. However, an investment in the stock today can still pay off.

Birchcliff stock has been trading in a cyclical manner. If you look at its price chart over a period of 10 years, you’ll notice the roller-coaster ride. At peaks, it tends to hit highs of more than $13 per share. The most recent peak hit a high of more than $9 per share.

ADVERTISEMENT

Notably, in the last four peaks over a period of a decade, the stock hit the respective highs during the summer — mostly in June or July. We still have some summer months to go, which could push the stock to the $6-per-share level this year. This would imply near-term upside potential of about 16%.

If you’re looking for a peak that resonates with the stock’s cyclical pattern of the last decade, you may be waiting for a +$9 target for the next two to four years. This would imply long-term upside potential of more than 70%.

So, buyers or holders of Birchcliff stock should be aware of their investment horizon for the stock and adjust their price targets accordingly.

Dividend

Birchcliff stock offers a quarterly dividend per share of $0.025, which implies a dividend yield of just under 2% at the recent quotation of $5.16 as of writing. Although the dividend is small, it’ll still be a welcome addition to the overall returns.

Recent results

Birchcliff’s average production for 2017 was about 68,000 barrels of oil equivalent per day (boepd). Its first-quarter average production was about 76,300 boepd, which was an increase of 24% compared to the same period in 2017.

Management estimates that this year, Birchcliff’s average production will be 76,000-78,000 boepd, which would be a growth of 12-15% over 2017.

In April, Birchcliff entered a long-term (at least 15 years) natural gas-processing agreement at AltaGas Ltd.’s deep-cut sour-gas processing plant in the Gordondale area. This deal will help stabilize Birchcliff’s cash flow generation.

Investor takeaway

Insider purchases are always a positive sign. Insiders bought Birchcliff stock directly or indirectly as recently as early this month at $4.89 per share.

Birchcliff stock tends to have seasonal strength in the summer. Investors looking for a quick trade for this summer could aim to sell at the $6-per-share level. However, this is a riskier method than investors looking for a longer-term investment of two to four years with a target of about $9.

More reading

Fool contributor Kay Ng owns shares of AltaGas and Birchcliff. AltaGas is a recommendation of Stock Advisor Canada.