2011 Best Oil Stock to buy to Make More Money-Part 2

2011 Best Oil Stock to buy to Make More Money-Part 2

This is second part of this article --2011-best-oil-stock-to-buy-to-make-more money

#5-Crescent Point Energy (TSX: CPG)

This is by far the hot Canadian oil stock right now, but for good reason.  Not only does it seem to have the best growth and production prospects over the next ten years, but it has the best location of reserves in both southwest and southeast Saskatchewan.  One factor to consider is its small market cap relative to others in the sector.  It also has an unusually high yield, perhaps owing to its recent conversion from income trust status. Crescent Point Energy Corporationis considered operating in the Energy sector. They specifically operate in the Independent Oil & Gas business segment contained within the Oil & Gas - E&P industry. Through Crescent Point Resources Ltd. and other subsidiaries, explores for, develops and produces oil and gas in western Canada.

#6- Canadian Natural Resources (TSX: CNQ)

Canadian Natural Resources, Ltd.is considered operating in the Energy sector. They specifically operate in the Independent Oil & Gas business segment contained within the Oil & Gas - E&P industry.

Canadian Natural Resources Limited was incorporated under the laws of the Province of British Columbia on November 7, 1973 as AEX Minerals Corporation (N.P.L.) and on December 5, 1975 changed its name to Canadian Natural Resources Limited. It is a Canadian based senior independent energy company engaged in the acquisition, exploration, development, production, marketing and sale of crude oil, NGLs, and natural gas production. The Company's main core regions of operations are western Canada, the United Kingdom sector of the North Sea and Offshore West Africa. It initiates, operates and maintains a large working interest in a majority of the prospects in which it participates. It focuses on exploiting its core properties and actively maintaining cost controls. The Company's business approach is to maintain large project inventories and production diversification among each of the commodities it produces namely: natural gas, light/medium crude oil and NGLs, Pelican Lake crude oil (14-17º API oil, which receives medium quality crude netbacks due to lower production costs and lower royalty rates), primary heavy crude oil, thermal heavy crude oil and SCO. Its operations are centered on balanced product offerings, which together provide complementary infrastructure and balance throughout the business cycle. Virtually all of the Company's natural gas and NGLs production is located in the Canadian provinces of Alberta, British Columbia and Saskatchewan and is marketed in Canada and the United States.

For a long time, value investors have used the current share price relative to sales per share levels as an important valuation tool. We utilize a historical weighted average methodology that treats recent years more importantly in the calculation. When looking at CNQ through this framework, we can see that our weighted average historical high and low Price to Sales per share ratios over the last 10 years are 3.07x and 1.31x respectively.

Utilizing this range we can see that CNQ’s current Price to Sales per share ratio of 2.83x is high enough compared with historical norms of CNQ to cause some concern. The current Price to Sales per share is near the upper end of the historical range. In our eyes, this is a negative factor because it is more likely that it will return to the normal range than continue rising outside of the range. At current sales per share levels, we would need to see a decline in the Price to Sales ratio of 28% merely to return CNQ to its historical average.