Canadian Natural may gain 191% in 2020. Is it a strong-buy?

The stock markets experienced heavy losses in late February and March, but the recent rally boosted the futures significantly. While the stocks aren’t out of the woods yet, governments are preparing to lift the strict restrictions and return the usual rhythm of life.

Investors are looking for ways to rebuild their portfolios. They want to buy the companies, which can combine positive recent earnings, strong upside potential, and high-yield dividend payments. The experts advise buying Canadian Natural, as this stock has the potential to bring hefty profit.

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Why is Canadian Natural a good choice?

This hydrocarbon exploration company in Canada’s energy sector owns the largest undeveloped acreage base. It is Canada’s largest heavy crude oil producer, as well as a major independent producer of natural gas. However, it also operates in the North Sea and off the coast of West Africa.

Canadian Natural announced its quarterly dividend of 42.5 cents Canadian, offering a 9.4% increase in the quarterly payment. The annualize payment offers a yield of 9.4% at $1.27 in U.S. currency. It’s far higher than the average dividend yield among S&P listed companies. This dividend increase is also the fourth payment increase in the past three years for the stock.

The company generated record cash flows of $10.3 billion in 2019, with a free cash flow of $4.6 billion. Canadian Natural reported 1.098 billion barrels of oil equivalent in production for the year. This is 2% higher than the year before in spite of a difficult price environment.

Analyst Jon Morrison is also impressed by stocks management. According to him, Canadian Natural is focused on building an enduring long-term business that is structured to handle the inevitable industry cycles, as well as being focused on controlling that which is within its control.

Morrison set his price target of $24.45 for this stock, implying a 191% upside potential in the 12 months. The average price target of US$22.34 suggests almost 88% upside over the next 12 months.