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By Rebecca Penty

Portfolio managers and analysts are suggesting investors may want to steer clear of oilsands developers and coal producers and buy royalty stocks and companies with assets outside Alberta.

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An index of Canadian energy companies plunged the most in three months on Wednesday after the election win by Rachel Notley’s NDP, which has pledged to boost corporate taxes, review the government’s royalty rates for energy producers and phase out coal power.

Canadian Oil Sands Ltd. is among the most exposed to a potential hike in royalties and stricter environmental policies, while electricity supplier TransAlta Corp. would suffer from the new government’s vow to shut coal plants sooner than planned, according to analysts at BMO Nesbitt Burns and RBC Dominion Securities.

“Oilsands to me is public enemy No. 1 in the new premier-elect’s mind,” said Eric Nuttall, a Toronto-based fund manager focused on energy at Sprott Asset Management LP. “The investment thesis in all of those stocks evaporated overnight.”