Back to basics with proven profits 11 www.taipanonline.com SEPTEMBER 2004 That’s good for Suncor. Even better is that Suncor
owns a huge chunk of a lucrative market in an area
free from the conflicts plaguing the Middle East.
Estimates put Suncor’s current oil sand reserves at
175 to 200 billion barrels—second only to Saudi
Arabia. …and profitable Suncor isn’t just about oil, though. It also has a
profitable natural gas business that enjoyed a 19%
jump in production to an average 209 cubic feet per
day during the second quarter. Natural gas is a fast-
growing and attractive sector in its own right. For
Suncor, it provides an additional benefit since it’s
also used in the extraction of oil sands. From April through June, 2004, Suncor’s oil
sands production swelled 20% to 225,900 barrels
per day from a year earlier. Naturally, higher pro-
duction and higher oil prices led to an outstanding
quarterly performance. Profits soared a record 75%
to C$203 million (US$151.8 million) or 44 Canadian
cents per share, up from C$116 million (27
Canadian cents per share) in Q2 2003. That’s 63%
earnings-per-share growth, putting the company on
pace to earn almost US$2 per share in 2004. Cash
flow rose 37% from C$358 million to C$490 million.
So it was no surprise to see the bulls on parade,
sending Suncor stock to a record high of US$30 on
August 3. Pumping up production This was no fluke either. Since 1999, Suncor has averaged 18% revenue growth per year, and a whop-
ping 56.6% over the past fiscal year (to a total of
US$5.6 billion). Earnings-per-share growth has rolled
in at 23%. The company’s net profit margin currently
stands at a robust 14%—more than double the indus-
try average. Operating margin is 21%. Return on
assets is a healthy 10% vs. just 5.7% for its rivals,
while the impressive 26% return on equity proves
that Suncor’s management combines prudent short-
term fiscal strategy with the long-term investment
needed for future growth. You’ll even get a small divi-
dend of 18 cents per share (0.65%) for your trouble. Having increased output by 10% each year over
the last decade, current projections call for Suncor
to crank out 260,000 barrels of oil per day in 2005.
Indeed, from 2004 through 2008, production is
expected to continue growing by 10% per year.
Would you believe that’s actually better than projec-
tions for oil heavyweights Exxon-Mobil, Shell, BP
and Chevron-Texaco? Some industry insiders think
Suncor will lead the production league as soon as
2007 and will be pumping 500,000 barrels of oil per
day by 2011—a rate the company says it can sus-
tain for 50 years. Buy Suncor Energy (SU:NYSE) under US$28.50. It’s that time of year again.
Ads full of backpacks, cell phones and clothes are popping
up. And soon the school buses
will be making their way down the
streets as happy parents watch
aggravated students get on the
bus. College kids will move back
to the dorms. And close to 70 mil-
lion students ranging from kinder-
garten to college age will refill
classrooms across the country. More than four mil-
lion students will head to nursery school, while
more than three million students age 35 and older
go back to college. Yep, it’s that time of year again. Where did the
summer go? We’re only weeks away from students forking
over more money for books and supplies than a college teen makes all season. That means it’s time
to revisit an old favorite that has provided us with
historically proven profits five times before. Each time the Red Zone Profits team has played
today’s pick, Varsity Group (VSTY:OTC-BB), we’ve
walked away with quick and easy profits playing In order to devote more of our limited print space to bringing you profitable news and information, we
are moving the Taipan classified ads to our website, www.taipanonline.com. If you are interested in advertising with us, please email Sara Nunnally at
snunnally@taipangroup.com. Taipan'sClassifieds Next… Ian Cooper
