TFSA Investors: You Have to Own This Oil Stock

Imperial Oil Limited (TSX:IMO) is one of Canada’s strongest oil companies backed by the largest publicly traded oil company in the world. Could this big, strong company provide a phenomenal investment return over the long-term?

| More on:

Imperial Oil Limited (TSX:IMO) engages in the crude oil and natural gas business in Canada. It operates in three segments: Upstream, Downstream, and Chemical. The company is over 135 years old and corporate headquarters is in Calgary, Canada. Imperial Oil Limited is a subsidiary of Exxon Mobil Corporation.

The Upstream segment has 404 million oil-equivalent barrels of proved undeveloped reserves and explores for and produces crude oil, natural gas, synthetic oil, and bitumen.

The Downstream segment is involved in the transportation and refining of crude oil, as well as processing of refined products. It also transports crude oil to refineries by contracted pipelines, common carrier pipelines, and rail and maintains a distribution system to move oil to market by pipeline, tanker, rail, and road transport.

In addition, this segment markets and supplies petroleum products to motoring public through approximately 2,300 Esso and Mobil-branded sites.

The Chemical segment manufactures and markets various petrochemicals and polyethylene, such as benzene, aromatic, and aliphatic solvents; plasticizer intermediates; and polyethylene resin products.

Imperial is an iconic Canadian company with a significant resource base, financial strength, disciplined investment approach and technology portfolio, and is well positioned to participate in substantial investments to develop new Canadian energy supplies.

The company’s integrated business model, with significant investments in Upstream, Downstream and Chemical segments, reduces the company’s risk from changes in oil prices.

While commodity prices depend on supply and demand and may be volatile on a short-term basis, Imperial’s investment decisions are grounded on fundamentals reflected in the long-term business outlook, and use strict criteria in selecting and pursuing the most attractive investment opportunities.

Major investment opportunities are evaluated over a range of possible market conditions. Once major investments are made, a reappraisal process is completed to ensure relevant lessons are learned and improvements are incorporated into future initiatives.

The company projects that by 2040, the world’s population will be around 9.2 billion people, or about 1.8 billion more people than in 2016. Coincident with this population increase, the company expects worldwide economic growth to average close to 3 percent per year, with economic output nearly doubling by 2040.

As economies and populations grow, and as living standards improve for billions of people, the need for energy is expected to continue to rise over the long-term and Imperial is well positioned to take advantage of it.

Even with significant efficiency gains, the company projects that global energy demand will rise by about 25 percent from 2016 to 2040. This increase in energy demand is expected to be driven by developing countries.

Canada is expected to see flat to modest local energy demand growth through to 2040 and will continue to be a big supplier of energy exports to help meet rising global energy needs.

Imperial also plans to enhance artificial intelligence capabilities and to collaborate with the Alberta Machine Intelligence Institute for progressing machine learning capabilities, which will develop more effective ways to recover petroleum resources, lower operating costs and reduce environmental impacts.

Despite the recent oil weakness, Imperial Oil appears to be a great stock to hold for the long term.

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.

More on Investing

dividend growth for passive income
Dividend Stocks

2 Passive-Income Stocks to Watch in January

Check out BMO Equal Weight REITs Index (TSX:ZRE) and another intriguing passive-income play this month.

Read more »

A close up color image of a small green plant sprouting out of a pile of Canadian dollar coins "loonies."
Investing

Got $500? 3 Under-$25 Canadian Growth Gems to Grab Now

These three under-$25 growth stocks offer excellent buying opportunities.

Read more »

analyze data
Tech Stocks

I Just Bought BlackBerry Stock: Here’s Why You Might Want Shares, Too

Here are the key reasons why BlackBerry stock could be one of the most attractive TSX stocks to consider today.

Read more »

dividends grow over time
Dividend Stocks

1 Magnificent Canadian Dividend Stock Down 39% to Buy and Hold for Decades

This stock is a magnificent dividend stock that can withstand crises, generate wealth, and give inflation-adjusted annual payouts is down…

Read more »

clock time
Dividend Stocks

Time to Buy: 1 Dividend Stock Offering a Huge Deal

This dividend stock might be down, but don't keep that from missing out on this major deal.

Read more »

A airplane sits on a runway.
Stocks for Beginners

Should You Stick With Air Canada Stock Through 2030?

For investors looking at the big picture, AC stock might be worth holding onto through 2030 as it remains focused…

Read more »

oil and gas pipeline
Dividend Stocks

Canadian Pipeline Stocks: TC Energy vs. Enbridge

Investors seeking to stabilize cash flows in this volatile market can invest in these dividend-paying Canadian pipeline stocks.

Read more »

Person holding a smartphone with a stock chart on screen
Dividend Stocks

Outlook for Rogers Communications Stock in 2025

Rogers stock has been going through a tough time, but what does the future hold for this telecom giant?

Read more »