The Motley Fool

Two Companies Leading The Way on Tuesday And One Laggard

With an hour left to go in the trading day, Canadian Natural Resources (TSX:CNQ,NYSE:CNQ), +3.5%, and Suncor Energy (TSX:SU,NYSE:SU), +1.1%, were the two biggest positive contributors to the S&P/TSX Composite Index, which was up by about 58 points or 0.45%.

A lower U.S. dollar caused the WTI oil price to rise, which helped to lift the shares of both companies.  The dollar declined as G7 countries announced they intend to “…remain oriented towards meeting our respective domestic objectives using domestic instruments, and that we will not target exchange rates”.  This statement had much to do with the recent devaluation of the Japanese Yen and the fear of a currency war emerging as countries seek out a weaker currency to help stimulate domestic growth.

Ministers of the G7 were apparently trying to make clear that they plan to continue to focus on helping their respective economies through monetary policy, not by purposefully devaluing their currency.  If monetary actions result in a lower currency, they will consider it a by-product.  Their statement indicates that currency devaluation cannot be the primary goal of monetary action.  That’s a mighty fine line they’re walking.

Expect further moves out of the Canadian oil patch through the rest of the week as heavy hitters like Talisman Energy, Cenovus Energy, and Encana are all scheduled to report.


The leading detractor from the Index was TransCanada Corp. (TSX:TRP), which was down 1.4%.  The company released Q4 and 2012 earnings on Tuesday and missed EPS estimates.

TRP is not a company you own because of how it might perform relative to quarterly expectations.  The company has an impeccable record of dividend growth (they bumped the dividend by another 5% today) and billions worth of projects on the horizon that ensure cash flows and dividends will continue to rise for years to come.  The company started work on $3.4 billion worth of projects in 2012 and signed on $16 billion worth of future projects during the year.  TRP shareholders measure success over decades – a quarterly blip is essentially meaningless.

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Fool contributor Iain Butler is short February 2013 $25 put options on Canadian Natural Resources.  The Motley Fool has no positions in the stocks mentioned above.

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