Suncor (TSX: SU) Stocks Soar On New Investment: Good Time To Buy?

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Summary

  • Suncor Energy is investing in Svante to reduce its carbon footprint.
  • The new technology will allow Suncor to produce blue hydrogen.
  • As the economy is showing signs of recovery, and offices and businesses are resuming normal wok, fuel demand is expected to rise. This will impact Suncor stocks.

In a bid to reduce greenhouse gas emissions, Suncor Energy Inc. (TSX: SU) is all set to invest in Svante Inc., a company that is involved in carbon capture technology.

With Canada on the path of reducing its carbon footprint and green energy shift, this move seems to be the right one for Suncor, which has an extensive oil and gas operations contribute to that footprint.

 

What's the deal and why is it important?

 

Svante is expected to support Suncor for the commercialization of a technology that will reduce the cost of carbon capture. Both the companies will work in collaboration and Suncor is planning to cut down emissions intensity by 30 per cent from its petroleum operations in the next ten years.

Suncor has invested US$25 million in Svante, and this increased total funding to US$ 100 million under Series D financing, the fourth stage in the seed stage financing.

Ever since its inception in 2007, Svante has got more than US$ 175 million in funding.

With this technology, Suncor will not only reduce greenhouse gases emissions but can also produce blue hydrogen as an energy product. Suncor can efficiently reduce the cost of carbon capture and this move will likely boost the prospects of the company's stocks.

 

The bottom line

 

With oil prices rising, Suncor is expected to do well in the coming months. The West Texas Intermediate (WTI) oil is trading near US$ 60 per barrel (Thursday close) and market experts believe that in the next two years it might go up to US$ 100.

The Canadian economy is showing signs of recovery and people will start returning to offices and businesses as normalcy restores. This will lead to a rise in fuel demand.

There are chances that the stocks will ride high due to added advantage of this move and Suncor's stock may perform well over the next few months. The scrips were priced at C$ 27.18 apiece at market close on Thursday. This is still lower than its 52-week high of C$ 29.55.

The investors may see this as an entry point and those who are holding the stock may on continue to do so. The company's stock grew 80 per cent in a year and 27 per cent year-to-date.

Notably, in Q4 2020, the company narrowed down its loss to C$ 168 million, compared to a net loss of C$ 2.3 billion in Q4 2019.

The above constitutes a preliminary view and any interest in stocks should be evaluated further from an investment point of view.


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