Investing

I have just updated my valuation for Canadian Oil Sands (COS-un.to COS_un.to COSWF.PK). I still think the stock has about 2x upside with current oil prices. Quite amazingly that means that the stock price has not increased to reflect the business or the upcoming expansion. All the increase has been a reflection of the price of oil. Back when I first recommended Canadian Oil Sands I thought it was trading at 33% of intrinsic value and I still do.

COS is still valued above today's price of 113.75 CAD if oil were only trading at $35USD. This makes the case for investing, even if you think oil prices might moderate, very strong. COS is basically trading as if oil were at $35USD and oil is in fact nearly double that. Though you could have made over 400% on COS if you had bought when I first started to recommend it. I still think there is 2x left in it and I would not be a seller at this point because with the exception of Strathmore Minerals and Silver Standard it's still my 3rd best idea. Once the current expansion is paid off and the distributions start to rise (I think distributions could hit $25 within 5 years) the value could start to be unlocked.

Finally, Matthew Simmons was interviewed on financialsense.com and said the supply and demand imbalances could easily drive oil up 5-10 times. Though that sounds amazing, prices are not linearly derived from supply and demand and he predicts there could be a 5M bbl per day deficit soon. $66 oil has not really affected people's decision to drive and Holland gets by with gas prices 3 times higher than the U.S so don't think $200 oil is going to crater the economy or even significantly lower US demand. $400 oil probably would change driving habits and would start to bring supply and demand back into balance. I smile every time I fill up my car and it costs another 10% because I know my oil could have come from Syncrude!