Is this Canadian oil stock a buy with prices at a 7-year high?

Highlights

• This stock is among the top five most actively traded stocks on the Toronto Stock Exchange.
• It has soared by more than 681 per cent in the past year.
• The firm posted a return on equity of 120.84 per cent.

The ongoing gas crunch has stimulated the demand for crude and oil products, which has further triggered a rise in prices. On Tuesday, October 5, oil prices were the highest since 2014.

A shortage in the supply of natural gas with winter coming, increased prices of natural gas products, which in turn led to a rise in demand for crude and oil.

Also read: Which TSX energy stocks to buy as oil hits highest price since 2014?

As prices rise, let us discuss a Canadian oil and gas firm listed on the Toronto Stock Exchange (TSX).

Baytex Energy Corp. (TSX:BTE)

The Calgary-headquartered oil and gas firm Baytex Energy Corp. is engaged in the exploration, development and production of crude oil and natural gas with operations in Canada and the United States.

The firm’s stock touched its 52-week high of C$ 3.86 on Monday, October 4, and wrapped up trading nearly three per cent below at C$ 3.75 apiece on Tuesday, October 5.

BTE’s stock skyrocketed by more than 681 per cent in the past year and surged by almost 60 per cent in the last one month. Its stock grew by more than 443 per cent on a year-to-date (YTD) basis.

Baytex recorded a three per cent increase in its production of oil and natural gas liquids to 81,162 barrels of oil equivalent per day in the second quarter of 2021 compared to the first quarter of the same year.

The firm reported a 12 per cent rise in its adjusted funds flow to C$ 176 million in Q2 2021, compared to C$ 157 million in Q1 2021. In addition, it posted a free cash flow of C$ 112 million and reduced its net debt by C$129 million, in its latest quarter.

At the time of writing, Baytex held a market capitalization of over C$ 2 billion with a return on equity (ROE) of 120.84 per cent and a return on asset (ROA) of 32.04 per cent. Its debt-to-equity (D/E) ratio stood at 1 and price-to-cash flow ratio at 4.8.

Baytex Energy Corp. is ranked among the top five actively traded stocks on the TSX with a 10-day average trade volume of 7.7 million on October 5.

Also read: Top 4 events for Canadian investors to watch on October 6

Bottom line

The higher demand for oil could lead to higher oil prices, and the oil stock prices may rise if this situation continues. The rising oil stock prices might fetch high returns for investors as oil is a scarce resource but the reverse can occur too.