Get into gear with Gear Energy
Double digit dividend, lots of leverage to higher oil prices and a clean balance sheet
I own a small position in Gear Energy (GXE.TO). Trading at CAD$1.08 with a 12 cent annual dividend rate (paid monthly at $0.01 per month) this small capitalization company is a terrific source of income for my TFSA where the dividends accumulate free of taxation. I model Gear as having an instrinsic value at CAD$100.00 oil price and CAD$6.00 per gigajoule gas price of about CAD$1.75 to CAD$2.00 a share.
While heavy oil (WCS) prices in Canada are currently below CAD$100.00 (they have averaged over CAD$100 year to date) I expect the discount to WTI to narrow as short term factors (refinery maintenance, pipeline issues) ease and to trade more or less at CAD$100 in 2023. The current WCS price of US$57.44 is equal to CAD$78.00 so I am demonstrating some speculative optimism in my valuation, but even at the current (an in my view depressed) WCS price, the shares are under valued.
Here is my model. You can plug in your own assumptions and decide how much risk or opportunity the stock presents for yourself.
Merry Christmas to all. I wish you success in 2023 and beyond.
wish this arrived a day earlier -- up almost 10% today! : >
Merry Christmas to you Michael & Happy 😊 2023! Thank you so much for all your valuable articles you have written this year! Very much appreciated....🤗