CVE - Cenovus Energy: Lots Of Cash Flow At A Cheap Price

2024-04-01 09:22:44 ET

Summary

• Cenovus Energy has a history of significant integration and opportunistic acquisitions.
• Margin expansion and above average growth should continue for years to come.
• The company's cash flow has about tripled (by fiscal 2022) in less than seven years, and it is expected to continue growing.
• Management expects roughly 19% growth over the next five years, which is impressive for a large company.
• Investors are about to have nearly double the money available for dividends and share repurchases.

Cenovus Energy ( CVE ) has long been the Rodney Dangerfield stock of the integrated companies. The reason is a relatively short history of significant integration and the fact that the integration of large acquisitions frequently takes a few years. But all that means is there is more margin expansion ahead that will raise the profitability more than the growth plans to provide double-digit earnings per share growth for several years to come. This company also has historically made opportunistic acquisitions that may well keep an above average growth rate going for a very long time. This is in addition to an increasing dividend, as I mentioned before . Large companies rarely offer investors this opportunity.

Growth

During the investor day presentation , management sees growth rising roughly 19% over five years. For a large company, that is about what investors can expect....

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