Suncor Energy shares continue to trade in a bull market after Berkshire Hathaway closed its positions

By:
on May 27, 2021
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  • Suncor Energy shares have been moving in an uptrend last several months
  • Suncor Energy reported better than expected first-quarter results
  • Berkshire Hathaway closed its positions in Suncor Energy during the first quarter of 2021

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Suncor Energy Inc. (NYSE: SU) shares have advanced from $17 above $24 since the beginning of February 2021, and the current price stands around $23. This stock is still reasonably valued, but despite this, Warren Buffett’s Berkshire Hathaway closed its positions in Suncor Energy during the first quarter of 2021.

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Fundamental analysis: Suncor Energy reported better than expected first-quarter results

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Suncor Energy primarily focuses on developing petroleum resource basins in Canada’s Athabasca oil sands, but the company also trades in crude oil, natural gas, byproducts, refined products, and power. Suncor Energy shares are advancing last several months, the company is preparing for a safe and staged return to normal operations, and as more people get vaccinated, economic activities will continue to improve.

The Covid-19 pandemic still impacts the company’s business, but Suncor Energy reported better than expected first-quarter results this month. The company generated C$2.1 billion in funds from operations in the first quarter of 2021 and reduced total debt by C$1.1 billion.

Suncor Energy reported net earnings of C$821 million (C$0.54 per share) compared with a net loss of C$3.525 billion (C$2.31 per share) in the first quarter of 2020. The board of directors declared a C$0.21/quarterly share dividend which will be payable on June 25 to stockholders of record as of June 4, 2021.

Suncor Energy’s 2.8% dividend looks safe, and the company continued with its share repurchase program during the first quarter of 2021.

“In the first quarter, we executed upon the commitments we have made to our shareholders, namely: operational excellence, financial resilience, shareholder returns, and a disciplined focus on costs across the company. Our buyback resumed at the beginning of February, and including purchases made in April, we bought back approximately 20 million shares for C$530 million, representing a buyback yield of 5% on our market cap on an annualized basis,” said Mark Little, President, and Chief Executive Officer.

Suncor Energy trades at less than nine times TTM EBITDA, and with a market capitalization of $34.84 billion, shares of this company are reasonably valued. Despite this, Warren Buffett’s Berkshire Hathaway closed its positions in Suncor Energy during the first quarter of 2021, but the company didn’t announce reasons for exiting their Suncor stake.

Technical analysis: Bulls remain in control of the price action

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Data source: tradingview.com

Shares of this company have been moving in an uptrend last several months, and if the price jumps above $25, it would be a signal to trade Suncor Energy shares, and we have the open way to $28.

On the other side, if the price falls below $20 support, it would be a strong “sell” signal, and the next target could be around $18. Traders should have in mind that if the oil price enters a more significant correction phase, the share price could be at much lower levels.

Summary

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Suncor Energy shares have been moving in an uptrend last several months, and according to technical analysis, there is no risk of the trend reversal for now. Suncor Energy’s 2.8% dividend yield looks safe, and the company continued with its share repurchase program; still, Warren Buffett’s Berkshire Hathaway closed its positions in Suncor Energy during the first quarter of 2021.

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