Cole Smead

Argues the energy sector, particularly upstream oil producers, is undervalued. Notes returns on capital are "exploding" with free cash flow 2-3x higher than at the start of the year, while stock prices haven't kept pace. Highlights that capital-intensive energy now yields higher returns than many SaaS businesses. The Iran conflict is a long-term structural supply impediment, unlike transient shocks. Low prices in prior years led to capital discipline and supply cuts. The world needs the commodity, and North America provides secure supply amidst global instability. Bullish on the sector for sustained outperformance, favoring upstream producers and independents (like APA, Strathcona) which may become M&A targets due to exploding cash flow. A swift, peaceful resolution in Iran that restores full supply and collapses the geopolitical risk premium.

Canadian energy producers with long-life assets like tar sands are attractive based on enterprise value per flowing barrel. The downstream assets provide additional value that the market may not fully appreciate.