3 Falling Knives I’d Buy With an Extra $5,000

Canadian Natural Resources Ltd. (TSX:CNQ)(NYSE:CNQ), Cameco Corporation (TSX:CCO)(NYSE:CCJ), and Teck Resources Ltd. (TSX:TCK.B)(NYSE:TCK) are getting killed right now. Here’s why you should buy.

The Motley Fool

Canadian Natural Resources Ltd. (TSX: CNQ)(NYSE: CNQ), Cameco Corporation (TSX: CCO)(NYSE: CCJ), and Teck Resources Ltd. (TSX: TCK.B)(NYSE: TCK) are getting killed right now, and conventional investing wisdom suggests that trying to catch a falling knife is a risky way to buy a stock.

However, if you have a bit of cash sitting on the sidelines, and you tend to be a long-term contrarian investor, I think these companies are worth considering for a small position in the portfolio.

Here’s why.

Canadian Natural Resources

Canadian Natural Resources probably owns the best portfolio of energy assets in the entire oil patch. The company’s Horizon oil sands operation is extremely efficient, and the CEO recently said Canadian Natural will be able to pump out strong free cash flow for decades, even if oil finally stabilizes around $70 per barrel.

The company is also one of the largest natural gas producers in western Canada. This winter is expected to be very cold and that should provide support for natural gas prices.

In northeastern B.C. and northwestern Alberta, Canadian Natural invested early in the emerging natural gas liquids play. The company has amassed an impressive land portfolio and already has the required infrastructure in place to give it a huge long-term competitive advantage in the region.

Once the dust settles on the current oil rout, Canadian Natural will be one of the energy producers left standing. In the end, investors will benefit from the company’s ability to buy weaker competitors for fire-sale prices.

Cameco Corporation

Cameco owns the world’s largest uranium mine. The facility also holds the highest-grade deposits on the planet. This combination positions Cameco well for the coming reboud in uranium demand.

Japan will eventually restart its nuclear plants. Two will probably come on line in 2015 and analysts expect as many as 30 to be in operation again by 2019. At the same time, roughly 90 net new global reactors are scheduled to begin producing electricity in the next 10 years.

Combine this with a decrease in global uranium production and you get the perfect set up for supply squeeze sometime in the next five to seven years.

Teck Resources

Teck is Canada’s largest diversified miner. The company produces metallurgical (steelmaking) coal, copper, and zinc. The global copper market is in the dumps, and worldwide metallurgical coal production is still outpacing demand.

The met coal oversupply is expected to reverse in the second half of 2015 as production cuts by global suppliers bring the market back into equilibrium. Copper prices are expected to remain near $3.00 per pound for 2015.

Teck is a low-cost producer in all of its business units and continues to be profitable despite the abysmal conditions in the met coal and copper markets.

The company pays a dividend of $0.90 per share that yields 6.6%. Teck will reduce or eliminate its share-buyback plan before it cuts the dividend, so I expect the distribution to remain in place as long as commodity prices stabilize near current levels.

CNQ, Cameco, and Teck definitely come with risks and it is a good idea to balance out the contrarian picks with a few solid dividend-growth stocks. The following free report discusses three companies that are worth adding to your watch list for 2015.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium service or advisor. We’re Motley! Questioning an investing thesis — even one of our own — helps us all think critically about investing and make decisions that help us become smarter, happier, and richer, so we sometimes publish articles that may not be in line with recommendations, rankings or other content.

Fool contributor Andrew Walker owns shares of Teck Resources.

More on Investing

A cannabis plant grows.
Cannabis Stocks

Canopy Growth Stock Is Rising But I’m Worried About This One Thing

Canopy Growth stock is soaring as the legalization effort makes real progress in both Germany and the United States.

Read more »

young woman celebrating a victory while working with mobile phone in the office
Investing

3 Roaring Stocks to Hold for the Next 20 Years

These top TSX stocks are excellent long-term buys, given their multi-year growth potential and solid underlying businesses.

Read more »

Two seniors float in a pool.
Dividend Stocks

TFSA: How to Earn $1,890 in Annual Tax-Free Income

Plunk these investments into your TFSA to earn passive income and avoid the taxman.

Read more »

grow dividends
Investing

Here’s My Top 3 TSX Stocks to Buy Right Now

Even though the TSX has been rising, there are still some good bargains out there. Here are three top compounding…

Read more »

Target. Stand out from the crowd
Investing

Prediction: This Canadian Growth Stock Could Double by 2030

Alimentation Couche-Tard (TSX:ATD) is a top growth stock that could do well over the next six or so years.

Read more »

Businessman holding AI cloud
Tech Stocks

Could Investing $20,000 in Nvidia Make You a Millionaire?

Nvidia stock has made investors millionaires in the last 10 years. Is it too late to invest to become a…

Read more »

Engineers walk through a facility.
Dividend Stocks

1 TSX Stock I Wouldn’t Touch With a 10-Foot Pole

AtkinsRéalis (TSX:ATRL) is one TSX stock I'd never invest in.

Read more »

money cash dividends
Stocks for Beginners

Have $500? 3 Absurdly Cheap Stocks Long-Term Investors Should Buy Right Now

If you're looking for cheap stocks, these three have a huge future ahead of them, all while costing far less…

Read more »