Eric Nuttall’s Top Energy Stock Picks for November 2024

Eric Nuttall’s top energy stock picks for November 2024 promise strong returns amid a misunderstood and undervalued market.

Editorial Team (ET)May 8, 2025

Eric Nuttall, a partner and senior portfolio manager at Ninepoint Partners, has cemented his reputation as a leading expert in the energy investment sector. Known for his sharp analysis and decisive insights, Nuttall remains steadfast in his focus on energy stocks. In his latest market commentary, he highlights MEG Energy, ARC Resources, and Tamarack Valley Energy as his top picks for November 2024. These companies, he asserts, represent significant opportunities in a sector often misunderstood by investors.

Energy Market Outlook: Misplaced Bearish Sentiment

Global oil inventories have hit their lowest levels since 2016, while demand has soared to record highs. Yet, sentiment in the energy market has rarely been as negative. Despite the S&P TSX Total Return Energy Index gaining approximately 20 percent this year, the narrative surrounding oil has been dominated by pessimism. Media reports continue to emphasize fears of oil gluts, weakening Chinese demand, and the notion that peak demand is perpetually on the horizon. This sentiment is further exacerbated by the International Energy Agency, which Nuttall criticizes for its alarmist stance.

The volatility in the oil market this year has been undeniable. Geopolitical tensions in key oil-producing regions, coupled with uncertainty about the potential return of Donald Trump to the U.S. presidency, have fueled anxiety. While this unease is understandable, Nuttall argues that it is misplaced. He believes the market is too bearish heading into 2025. While oil inventories may rise next year, they will do so from historically low levels, and global demand—particularly from China—is expected to strengthen. U.S. shale oil production is waning, marking the twilight of its dominance, and OPEC+ is unlikely to flood the market with supply. In this context, Nuttall foresees West Texas Intermediate (WTI) oil prices stabilizing in the $70 to $80 range, with natural gas averaging $3.50 per mcf.

MEG Energy: A Pillar of Stability

MEG Energy stands out for its robust financial metrics and shareholder-focused strategy. Trading at a free cash flow yield of 10 to 14 percent at $70 to $80 WTI, the company is channeling all of its free cash flow into share buybacks. This approach not only underscores MEG’s commitment to returning value to its investors but also positions it as a strong contender for those bullish on rising oil prices. With over 35 years of high-quality inventory, MEG offers stability and leverage, making it a cornerstone for energy investors seeking long-term growth.

ARC Resources: A Long-Term Winner

ARC Resources is a compelling choice for investors looking for stability and sustained growth. With more than 20 years of high-quality inventory, ARC combines scalable production with a shareholder-friendly model. The company is returning a significant portion of its free cash flow to investors through share buybacks, offering a free cash flow yield of 10 percent at $70 WTI and $3.50 NYMEX. This makes ARC not just a reliable performer but a long-term asset that investors can hold with confidence.

Tamarack Valley Energy: A Resilient Midcap Star

Tamarack Valley Energy has emerged stronger after overcoming operational challenges in recent years. The company has delivered three consecutive quarters of solid performance, cementing its position as a go-to midcap oil stock in Canada. Its focus on high-quality plays in Clearwater and Charlie Lake, known for their exceptional economics, has been instrumental in its resurgence. With 20 years of stay-flat inventory in Clearwater, Tamarack offers a free cash flow yield of 12 to 17 percent at $70 to $80 WTI. This impressive performance makes it a standout choice for investors seeking exposure to the midcap energy segment.

Key Drivers for Energy Stocks in 2025

The energy market is poised for a pivotal year in 2025, with several factors driving the sector. Chinese demand, often underestimated, is expected to rebound strongly, providing a significant boost to global oil markets. Meanwhile, the decline of U.S. shale oil production marks a turning point in global supply dynamics, reducing a key source of market oversupply. OPEC+ is also likely to take a measured approach to production increases, further supporting price stability. These dynamics create a favorable environment for energy stocks, particularly those with strong fundamentals and shareholder-focused strategies.

The Energy Transition Debate

Nuttall remains skeptical of the so-called energy transition narrative, arguing that the world still needs more of all forms of energy, including oil, natural gas, coal, and uranium. This pragmatic view underscores the enduring importance of traditional energy sources, even as renewables gain traction. For investors, this perspective reinforces the value of maintaining exposure to high-performing energy stocks.

Why Nuttall’s Picks Matter

The energy sector often faces headwinds from political uncertainty, geopolitical risks, and market volatility. However, companies like MEG Energy, ARC Resources, and Tamarack Valley Energy have demonstrated resilience and an unwavering commitment to shareholder value. By prioritizing share buybacks and maintaining strong inventories, these firms offer a rare combination of stability and growth potential. For investors seeking opportunities in an undervalued sector, Nuttall’s picks provide a compelling case for inclusion in a diversified portfolio.

Conclusion

Eric Nuttall’s energy market analysis and top picks provide a clear roadmap for navigating a challenging but opportunity-rich sector. With MEG Energy, ARC Resources, and Tamarack Valley Energy, investors can gain exposure to high-quality assets poised for growth. As the world grapples with shifting energy dynamics, these companies stand out for their robust fundamentals and commitment to delivering value. For those looking to capitalize on the energy market’s potential, Nuttall’s insights are an invaluable guide.

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