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Why TC Energy Stock Is Down 9% in a Month

oil and gas pipeline
Image source: Getty Images

Written by Amy Legate-Wolfe at The Motley Fool Canada

Shares of TC Energy (TSX:TRP) were doing quite well and should have continued to do so after hitting the market bottom back in October. However, after rising steadily, the stock saw its shares drop 9% in the last month. So, let’s look at what happened and why this could mean investors are getting a deal.

What happened?

Investors were less than pleased to learn that TC Energy stock was selling its Prince Rupert Gas Transmission Limited Partnership at the end of March. The company announced it would be selling the gas transmission line to the Nisga’a Nation and Western LNG.

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The transaction was outlined as part of the strategic priorities for 2024 for TC Energy stock. This would be to stay within the US$6 billion to US$7 billion annual net capital expenditure limit for 2024. Then, after 2024, it would maximize the value of its assets.

The deal was marked as a win for indigenous communities, and supports the long-term growth of the global emissions reduction targets. It would also bring in pre-tax cash equity of about $740 million. This will put the company well on track toward its $3 billion asset divestiture target for 2024.

Why the drop?

While the move isn’t unexpected, it comes after the company has had some rather unsettling news over the last few months. This includes the Keystone oil pipeline being offline due to operational issues. With a sale, the company will have even fewer products to sell.

Lately, the news has also led some investors to be on the lookout for the company’s first-quarter results. TC Energy stock is due to release these results on May 3. While it saw a strong 2023, it’s now the concern of shareholders that 2024 could be a bit more rough.

Now, shares are falling further as the company has more focus on renewable energy and less on oil and gas. Oil and gas remain the winners on the stock market these days as geopolitical tensions cause prices to rise higher.

What investors should do

With first-quarter results coming down the line in a few weeks, it’s likely best for TC Energy stock investors to take a wait-and-see approach. The company may indeed be able to demonstrate why these sales have left the company with a strong bottom line.

While that’s great, the company should also hopefully be able to demonstrate what they plan to do with the cash from these divestitures. If so, then it could be a great time to get in on the action with TC Energy stock.

After all, the company provides a whopping 7.74% dividend yield as of writing. It might also be expanding into renewables, but it still offers a solid pipeline network — one that will remain essential during this time when oil and gas from Canada are needed more than ever.

So, yes, TC Energy stock has been quite volatile over the last month or so. But see how the first quarter shakes out. This could lead to more growth for patient investors and even more for long-term ones.

The post Why TC Energy Stock Is Down 9% in a Month appeared first on The Motley Fool Canada.

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Fool contributor Amy Legate-Wolfe has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.

2024