Suncor's oil sands operations are positioned to benefit in a big way after the price of oil recovers. A relatively quick ramp-up means a 300,000-barrel-per-day 2009 production capacity is likely, provided oil's price recovers. The oil sands operation is not low-cost, as SU really has to dig and process for its profits: cash operating costs will average $29-35 per barrel, so you can see what oil price level SU will need to get its stock headed north again in a sustained way. Suncor has 1.1 billion barrels in proved oil reserves and 428 billion cubic feet of proved natural gas reserves.

Other pluses: Suncor's refining/marketing operation accounted for about 55% of revenue in 2008, refining and distributing crude, other fuels, petrochemicals, and various heating oil grades. The First Call FY 2009/FY 2010 EPS estimates for SU are $1.01 to $1.89.

The qualifiers? Obviously, a further deterioration in oil's price would hurt SU's results. The sense here is that with one more expected production cut from OPEC in March, the large inventory build in the U.S. and internationally will begin to top, and oil's price will begin to bottom, which is good news for Suncor.

Stock Analysis: Suncor is a moderate-risk stock. Consider buying a 25% position in SU now; then buy another 25% in three months, if U.S. economic conditions don't worsen substantially. Use the price of oil as a guide: if it collapses below $25 per barrel, back-off buying SU's shares. Under any circumstance, don't buy more than 50% of your SU position in the first half of 2009. Sell/Stop Loss if you were to buy shares in this company: $12.
- -

Disclosure: Lazzaro has no positions in stocks, but does own shares in two Pimco Bond Funds: PHDAX and PYMAX.