Written by SmallCapPower.com

Crescent Point Energy Corp.’s (CPG) (TSX:CPG) stock price is up nearly 12% from our initial report on August 24, 2017, trading currently at C$9.70. Despite the decent move, the stock trades at a third of its price of about C$40 in the ‘glory’ days of 2013-14, and looks significantly undervalued given its quality assets, continued successful execution of its new organic growth strategy (2017 exit production to rise 10%), and a decent (~4.0%) dividend yield. Additionally, a continued rise in the oil price could significantly improve its margins and earnings in 2017 and beyond. Investors could enter the stock at current levels and potentially see significant appreciation over the next year as operational and financial performance improves considerably.

Investment thesis

Crescent Point stock seems to have bottomed out

Although Crescent Point Energy has underperformed its peers over the past several years on low oil prices, dividend cuts and large equity investments in acquisitions, the stock seems to have bottomed out recently in August 2017. Since our initial report on August 24, 2017, the stock is up 12%, and has gained 17% over the past month on rising oil prices (WTI reaching US$50/bbl from $45/bbl) as well as the Company’s new commitment and continued success in executing its organic growth strategy. However the increase in share price is small and is negligible compared to the peak price of C$40 in 2014, thereby offering significant scope of continued upside on the back of rising oil prices and implementation of its new organic growth strategy.

Successful execution of organic growth strategy; 2017 exit production growth pegged at 10%

As Crescent Point Energy continues to execute its renewed organic growth strategy, significant operational potential exists driven by its Uinta Basin and Flat Lake properties. Crescent Point Energy reported a 5% increase in production for 2Q17 to 175,615 boe/d, and consequently the full-year 2017 guidance has been upwardly revised to 174,500 boe/d from 172,000 boe/d. One of the 2017 priorities for the Company is to execute organic exit production growth of 10%.