Best energy stocks to buy before oil prices hit $100 a barrel

June 22, 2021 07:12 AM EDT | By Raza Naqvi
Follow us on Google News:

With economies rebounding from the pits of last year’s pandemic lows, oil prices could surge to US$ 100 per barrel by 2022.

The Bank of America Corp (BofA) said in a report on Sunday, June 20, that as businesses return to normal operations, global oil consumption is likely to expand by next year. The International Energy Agency (IEA) also pointed earlier in June that the demand for oil around the world could reach 100 million barrels per day next year.

Amid stiffer supply and demand balances, oil prices could briefly touch US$ 100 per barrel, said the BofA Global Research report.

If crude oil touches a triple-digit figure, it would be the first time since 2014, when the market witnessed a slump due to the North American shale oil.

With that in mind, let's look at three Canadian energy stocks you can explore ahead of such a price surge.

Enbridge Inc (TSX:ENB)

Enbridge’s share price surged by six per cent in the past month. The oil stock clocked a 52-week high of C$ 50.19 on June 17, 2021. Since then, ENB scrip has dwindled slightly, closing at C$ 49.47 per share on Monday.

1-year chart of stock performance, volume and moving average multiple of Enbridge Inc. (Source: Refinitiv)

The oil and natural gas producer holds a 10.8 per cent return on equity (ROE) and a debt-to-equity ratio of 1.2, as per TMX.

One of the top dividend-payers in Canada, it has a quarterly dividend of C$ 0.835 per share and currently posts a dividend yield of 6.8 per cent.

ENB shares have returned 21.5 per cent this year and about eight per cent quarter-to-date (QTD). On the financial front, Enbridge posted robust first-quarter 2021 results with GAAP earnings of C$ 1.9 billion, as against a GAAP loss of C$ 1.4 billion in Q1 2020.

Cenovus Energy Inc. (TSX:CVE)

Cenovus, presently holding a market cap of C$ 24.99 billion, is making strong progress after completing the acquisition of Husky Energy Inc. on January 1 this year. In the first quarter of 2021, Cenovus produced approximately 770,000 barrels of oil equivalent per day (boe/d).

The oil and gas producer generated C$ 1.1 billion in adjusted funds flow and C$ 228 million in cash from operating activities in Q1. Cenovus is part of the alliance of energy companies that aims to achieve net-zero greenhouse gas emissions.

1-year chart of stock performance, volume and moving average multiple of Cenovus (Source: Refinitiv)

CVE stock catapulted by 60 per cent year-to-date (YTD) and grew 100 per cent in the past year. It was priced at C$ 12.39 on Monday, marginally down from its 52-week high of C$ 12.86 (June 15).

Canadian Natural Resources Limited (TSX:CNQ)

Canadian Natural Resources stock jumped five per cent to close at C$ 44.89 apiece on Monday. It surged as much as 21 per cent in the last three months and about 47 per cent YTD.

The energy sector in Canada is on a road to recovery, with the S&P/TSX Energy Index up 55 per cent YTD. As one of the largest energy companies in the country, Canadian Natural Resources is also expected to perform well in the remaining quarters of the year.

1-year chart of stock performance, volume and moving average multiple of Canadian Natural Resources (Source: Refinitiv)

Against a net loss of C$ 1.3 billion in the first quarter of 2020, CNQ recorded net earnings of C$ 1.4 billion in Q1 2021. The energy company holds a price-to-book (P/B) ratio of 1.6 and offers a 3.02 per cent return on assets, as per TMX data.

The above constitutes a preliminary view and any interest in stocks should be evaluated further from an investment point of view. The reference data in this article has been partly sourced from Refinitiv.


The content, including but not limited to any articles, news, quotes, information, data, text, reports, ratings, opinions, images, photos, graphics, graphs, charts, animations and video (Content) is a service of Kalkine Media Incorporated (Kalkine Media), Business Number: 720744275BC0001 and is available for personal and non-commercial use only. The advice given by Kalkine Media through its Content is general information only and it does not take into account the user’s personal investment objectives, financial situation and specific needs. Users should make their own enquiries about any investment and Kalkine Media strongly suggests the users to seek advice from a financial adviser, stockbroker or other professional (including taxation and legal advice), as necessary. Kalkine Media is not registered as an investment adviser in Canada under either the provincial or territorial Securities Acts. Some of the Content on this website may be sponsored/non-sponsored, as applicable, however, on the date of publication of any such Content, none of the employees and/or associates of Kalkine Media hold positions in any of the stocks covered by Kalkine Media through its Content. Kalkine Media hereby disclaims any and all the liabilities to any user for any direct, indirect, implied, punitive, special, incidental or other consequential damages arising from any use of the Content on this website, which is provided without warranties. The views expressed in the Content by the guests, if any, are their own and do not necessarily represent the views or opinions of Kalkine Media. Some of the images/music that may be used in the Content are copyright to their respective owner(s). Kalkine Media does not claim ownership of any of the pictures displayed/music used in the Content unless stated otherwise. The images/music that may be used in the Content are taken from various sources on the internet, including paid subscriptions or are believed to be in public domain. We have used reasonable efforts to accredit the source wherever it was indicated or was found to be necessary.

Top TSX Listed Companies

We use cookies to ensure that we give you the best experience on our website. If you continue to use this site we will assume that you are happy with it. OK