“Both oil and ingredients are up 20% for the year,” he says. “Within the material, the outperformance seems to be across the board — gold, copper, you name it.”
Not everything is coming to roses for Canada. For example, information technology has so far been a negative adversary for the Great White North. O’Kennedy says the sector is improving after enthusiastic investors who overestimated the business’s future prospects pushed it to the top.
However, the same trend of correction has played out in the US stock market, where technology as a sector is heavily weighted. With both the US and Canada officially taking the first steps on their respective rate-growth cycles, growth-oriented businesses, including tech, have taken a hit.
“Clearly, oil is the sector that is benefiting greatly from a macro trend standpoint,” O’Kennedy says. “With Russia’s invasion of Ukraine, I think there is some level of geopolitical risk premium in oil today.”
Canadian Oil’s Cinderella story is not about war. Since 2014, he says, the industry has faced a “long winter” during which it was starved for capital, resulting in a substantial shortage of drilling inventory. Today, oil companies are far less able to start production as before.
