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Wednesday, May 25, 2022

Suncor Energy is a purchase, however be ready to show if oil costs peak, Jim Cramer says

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CNBC’s Jim Cramer on Friday suggested traders to choose up shares of Canadian oil producer Suncor Energy, however provided that they’re assured oil costs will keep elevated.

Cramer’s feedback come after activist funding agency Elliott Management, which holds a 3.4% stake in Suncor, known as for the agency to shuffle its administration and take different measures to enhance its efficiency.

“I think Suncor’s future is less about this activist campaign and more about where the price of crude might be headed. If you think it’s going to stay elevated, this could be just an absolutely terrific stock because the oil sands can generate tremendous earnings growth,” the “Mad Money” host mentioned.

“However, indeed, if you believe oil will peak soon and head meaningfully lower, this stock’s going to be a dog and it won’t matter what changes [Elliot Management] make,” he added.

Shares of Suncor fell 2.58% on Friday however reached a brand new 52-week excessive earlier within the day.

Elliott Management cited “missed production goals, high costs, and, tragically, a number of employee fatalities and other safety incidents” in its letter.

Suncor responded to Elliott’s letter stating it’ll overview the funding agency’s suggestions.

“Whether you look at it from a financial perspective or a purely human perspective, this is not a well-run enterprise,” Cramer mentioned of Suncor’s monitor report.

However, he mentioned he believes the corporate has extra room to run for the reason that worth of crude is up, which means the corporate might change into a high-performer if it takes Elliott’s urgings into consideration.

Brent crude futures settled at $109.34 on Friday whereas U.S. West Texas Intermediate crude settled at $104.69.

“I think the stock jumped … yesterday because Wall Street’s confident Elliott can push Suncor’s board to unlock value,” Cramer mentioned. “Here’s some free advice to Suncor’s directors: Work with these guys.”

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