Canada Markets closed
  • S&P/TSX

    21,284.84
    +68.69 (+0.32%)
     
  • S&P 500

    4,566.48
    +21.58 (+0.47%)
     
  • DOW

    35,741.15
    +64.13 (+0.18%)
     
  • CAD/USD

    0.8076
    -0.0003 (-0.0363%)
     
  • BTC-CAD

    78,102.64
    +1,235.32 (+1.61%)
     
  • CMC Crypto 200

    1,513.35
    +1,270.67 (+523.60%)
     
  • GOLD FUTURES

    1,807.30
    +0.50 (+0.03%)
     
  • RUSSELL 2000

    2,312.64
    +21.37 (+0.93%)
     
  • 10-Yr Bond

    1.6350
    -0.0200 (-1.21%)
     
  • VOLATILITY

    15.24
    -0.19 (-1.23%)
     
  • FTSE

    7,222.82
    +18.27 (+0.25%)
     
  • NIKKEI 225

    29,053.66
    +453.25 (+1.58%)
     
  • CAD/EUR

    0.6958
    +0.0005 (+0.07%)
     

2 Canadian Oil Stocks to Buy for a Surge in Demand

  • Oops!
    Something went wrong.
    Please try again later.
  • Oops!
    Something went wrong.
    Please try again later.
·4 min read
In this article:
  • Oops!
    Something went wrong.
    Please try again later.
  • Oops!
    Something went wrong.
    Please try again later.
Pipeline
Pipeline

Written by Adam Othman at The Motley Fool Canada

The last few months have been presenting a complicated situation worldwide as some countries began reopening their economies amid rising vaccination rates while others were forced to enact further restrictions due to rising Delta variant cases.

The Organization of the Petroleum Exporting Countries (OPEC) is responsible for regulating the production of oil. With the uncertainty regarding the supply and demand for oil, rising oil production may not be considered viable. Rising environmental issues have added to the woes for oil producers and Canada’s energy sector took a hit from the combination of uncertainty and environmental concerns.

The OPEC alliance decided to keep restoring crude supply in September with the expectation of a soft recovery in demand over the coming months. As the surge in demand heats up, the Canadian energy sector will likely see an overall improvement in its performance.

Today, I will discuss two undervalued stocks from the energy sector that you should keep a close eye on before the surge in demand sends valuations soaring.

Cenovus Energy

The decline in crude oil prices in June and August led to a significant decline in Cenovus Energy (TSX:CVE)(NYSE:CVE) stock’s price on the stock market. The Canadian oil giant boasts one of the most significant integrated energy infrastructures in the country, surpassed only by Suncor Energy.

During the rise of oil prices at the start of the year, Cenovus acquired Husky Energy in a deal worth almost $4 billion, giving it a substantial boost to its production capacity.

While the dip in oil prices forced a pullback in the company’s share prices, the rising demand for oil in Q2 for fiscal 2021 brought its valuation up again. The company’s reduced dependence on oil prices due to its integrated structure provides it with a relative degree of safety from volatile commodity prices. However, the overall challenges for the energy sector do have an impact on its performance.

The stock is trading for $11.24 per share at writing and is up by over 18% from last month. It could be the right time to purchase its shares because it is still trading for an 11% discount from its 2021 highs.

TC Energy

TC Energy (TSX:TRP)(NYSE:TRP) is another energy infrastructure company that has had its fair share of challenges. Any capital investments made by energy infrastructure companies in environmental activities provide low returns, but the measures are necessary. The Keystone XL pipeline project led to several issues for TC Energy stock. The whole project looks like potential environmental disaster riddled with oil spills.

After what seemed like forever, the company finally cancelled the pipeline project. The cancellation of such an extensive project led to a decline in its share prices. However, the move should turn out to be an overall positive for the company. All of the money TC Energy had tied up in the project could be used in potentially more profitable ventures.

At writing, the stock is trading for $62.47 per share, down by 4.14% from its 2021 high. The share price is up by 6.51% since August 19 and it could be the right time to buy its shares before it enters overbought territory amid favourable conditions.

Foolish takeaway

If you want to consider getting exposure to the energy sector in anticipation of the world possibly moving on from the pandemic, Cenovus Energy stock and TC Energy stock could be viable assets for you to consider.

While some volatility may remain in the short term due to the changing situation with the pandemic, the passive income you can earn through shareholder dividends from these stocks could provide you with some decent returns on your investment until the sector sees a clearer path to recovery.

The post 2 Canadian Oil Stocks to Buy for a Surge in Demand appeared first on The Motley Fool Canada.

We’re Issuing a BUY Alert on this TSX Space Stock

Our team of diligent analysts at Motley Fool Stock Advisor Canada has identified one little-known public company founded right here in Canada that’s at the cutting-edge of the space industry and recently completed a transformational acquisition, all while making a handsome profit in the process!

The best part is that in a market where many stocks are selling at all-time-highs, this stock is trading at what looks like a VERY reasonable valuation… for now.

Click here to learn more about our #1 Canadian Stock for the New-Age Space Race

More reading

Fool contributor Adam Othman has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned.

2021

Our goal is to create a safe and engaging place for users to connect over interests and passions. In order to improve our community experience, we are temporarily suspending article commenting