Is Suncor Energy Inc. a Must-Buy After Announcing it Will Deploy Autonomous Trucks?

Suncor Energy Inc. (TSX:SU)(NYSE:SU) is no stranger to cutting-edge technology, as the company looks to make a significant change to its operations.

| More on:

Suncor Energy Inc. (TSX:SU)(NYSE:SU) recently announced that it is planning to deploy over 150 driverless trucks at its mines — a process that it expects will take six years to phase in. The company will be the first to test the autonomous haulage systems (AHS) in a commercial environment, but it said that it wouldn’t be compromising safety to do so.

Mark Little, chief operating officer, stated, “Autonomous haulage systems reduce interaction between people and equipment, which decreases incident rates and injury potential — helping us ensure everyone goes home safely at the end of every day.” Some of the features the company noted that AHS possesses are obstacle-detection systems as well as prescribed route mapping.

The big question that many are likely asking is how jobs will be impacted by these changes. While the company acknowledged that there could be some jobs eliminated as early as 2019, it also stated that the changes will result in a different set of skills required for positions and that roles would change, suggesting that some positions could be salvaged.

Is this a sign of things to come?

The companies that have been able to survive the downturn in oil prices have had to find ways to innovate and cut costs to stay competitive and turn out a profit amid a lower price of oil. Deploying autonomous trucks is just another way for companies like Suncor and others in the industry to create efficiency and find ways to maximize every dollar and potentially stay profitable during hard times.

The big danger with commodity prices is that companies need to be flexible enough to adapt to adverse conditions, and with many casualties in oil and gas the past few years, that industry is certainly no exception. If Suncor has a successful deployment, you can certainly bet that other oil and gas companies will look to follow suit.

The cruel irony in all of this for operators of heavy machinery in the oil sands is that job losses that hit the industry this time could be permanent and due to technological change that will actually improve the stability for oil and gas companies, rather than the instability that has typically been responsible for cyclical unemployment.

Why this makes Suncor a good buy today

Over the past six months, Suncor’s share price has risen more than 9% as oil prices have continued to rise. The company has managed to do well even amid a low price of oil with Suncor recording profits of more than $1.2 billion in its most recent quarter, up from less than $400 million a year ago.

Add into the mix driverless technologies, less staff, and a higher price of oil, and those results could skyrocket even further. With a dividend of nearly 3%, Suncor provides investors with an opportunity to make a great return on the stock by accumulating dividend income as well as benefiting from long-term capital appreciation as the company continues to innovate and grow.

The changes announced by Suncor coupled with the company’s recent performance might make it the best stock to buy in oil and gas.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium service or advisor. We’re Motley! Questioning an investing thesis — even one of our own — helps us all think critically about investing and make decisions that help us become smarter, happier, and richer, so we sometimes publish articles that may not be in line with recommendations, rankings or other content.

Fool contributor David Jagielski has no position in any of the stocks mentioned.

More on Dividend Stocks

dividends can compound over time
Dividend Stocks

Want a 7% Yield? The 3 TSX Stocks to Buy Today

These TSX stocks are offering high yields of over 7%, making them attractive for investors seeking steady passive income.

Read more »

how to save money
Dividend Stocks

The Smartest Dividend Stocks to Buy With $200 Right Now

These smartest dividend stocks can consistently pay and increase their dividends in the coming years, irrespective of the macro uncertainty.

Read more »

Electricity transmission towers with orange glowing wires against night sky
Dividend Stocks

3 Utility Stocks That Are Smart Buys for Canadians in November

These utility stocks benefit from regulated businesses and generate predictable cash flows that support higher dividend payouts.

Read more »

Start line on the highway
Dividend Stocks

Invest $10,000 in This Dividend Stock for $600 in Passive Income

Do you want to generate passive income? Forget the rental unit! This option will save you the mortgage yet still…

Read more »

Senior uses a laptop computer
Dividend Stocks

1 Reliable Dividend Stock for the Ultimate Retirement Income Stream

TD Bank (TSX:TD) shares are way too cheap with way too swollen a yield for retirees to pass up right…

Read more »

A worker drinks out of a mug in an office.
Dividend Stocks

Is Brookfield Infrastructure Partners a Buy for its 4.75% Yield?

Brookfield Infrastructure Partners (BIP) has a 4.75% dividend yield. Is it worth it?

Read more »

TFSA (Tax-Free Savings Account) on wooden blocks and Canadian one hundred dollar bills.
Dividend Stocks

Where to Invest Your $7,000 TFSA Contribution

The TFSA is attractive for investors who want to generate tax-free passive income.

Read more »

The TFSA is a powerful savings vehicle for Canadians who are saving for retirement.
Dividend Stocks

TFSA Investors: 3 Dividend Stocks Worth Holding Forever

These TSX stocks have the potential to grow their dividends over the next decade, making them top investments for TFSA…

Read more »