2 Heavyweight Energy Stocks to Buy Cheap

Oil prices are still reeling, but I’m bullish on energy stocks like Suncor Energy Inc. (TSX:SU)(NYSE:SU) and Enbridge Inc. (TSX:ENB)(NYSE:ENB) right now.

| More on:

Energy stocks were some of the first to succumb to major turbulence in end of February and beginning of March. The COVID-19 global outbreak compounded with a Saudi-Russian price war that decimated the oil and gas industry. Fortunately, there has been some positive movement for energy stocks in recent days.

That should not entirely calm the minds of investors. A federal bailout may be forthcoming, but producers are still wrestling with cratering prices. Reports indicate that small- and medium-sized producers will receive significant support, as they have been hit hardest by the sharp decline in prices. Canadians can expect legislation that will draw upon the TARP auto bailout in the United States in 2008.

Today, I want to look at two Canadian energy heavyweights that are worth trusting as we move into the month of April. These companies have the infrastructure to survive a low-price environment, and they boast attractive income.

Top energy stock: Enbridge

Enbridge (TSX:ENB)(NYSE:ENB) is the largest energy infrastructure company in North America and the largest energy stock by market cap on the TSX. Its shares have dropped 20% month over month as of early afternoon trading on March 31. The stock has now dropped 11% year over year.

The company put together a fantastic 2019, as it posted full-year GAAP earnings of $5.32 billion, or $2.64 per share, compared to $2.51 billion, or $1.46 per share, in the prior year. Each of its core businesses delivered growth in 2019. It also had promising success with some key regulatory wins that will open the door for its deep project pipeline in 2020 and beyond.

Management reiterated its strong dividend-growth target and hiked its quarterly dividend by 9.8% to $0.81 per share. This represents a tasty 8.1% yield. On the value side, Enbridge stock possesses a favourable price-to-earnings ratio of 15 and a price-to-book value of 1.4.

Suncor Energy

Suncor Energy (TSX:SU)(NYSE:SU) is one of the largest integrated energy companies in Canada, and it has proven robust even in the face of low oil prices in the past. Shares of Suncor have plunged 47% month over month at the time of this writing. The stock is down 52% year over year. It is still one of the most reliable energy stocks on the TSX.

Energy companies like Suncor were already encountering issues due to low prices at the end of 2019. In its Q4 2019 report, Suncor posted funds from operations (FFO) of $2.55 billion — up from $2 billion in Q4 2018. Total E&P production during the fourth quarter increased to 115,900 barrels of oil equivalent per day (boe/d) from 90,200 in the previous year. For all of 2019, net earnings fell to $2.89 billion over $3.29 billion in 2018.

In 2019, Suncor returned $4.9 billion in dividends and share repurchases to shareholders. Suncor last paid out a quarterly dividend of $0.465 per share. This represents a monster 9.8% yield. The stock was up 16.58% at the time of this writing, so the chance to add at current levels may be passing. Its shares now possess a favourable P/E ratio of 11 and a P/B value of 0.7.

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 Ambrose O'Callaghan has no position in any of the stocks mentioned. The Motley Fool owns shares of and recommends Enbridge.

More on Energy Stocks

engineer at wind farm
Energy Stocks

Invest $20,000 in This Dividend Stock for $100 in Monthly Passive Income

This dividend stock has it all – a strong outlook, monthly income, and even more to consider buying today.

Read more »

A worker overlooks an oil refinery plant.
Energy Stocks

Is Imperial Oil Stock a Buy, Sell, or Hold for 2025?

Valued at a market cap of $55 billion, Imperial Oil pays shareholders a growing dividend yield of 2.4%. Is the…

Read more »

Pumpjack in Alberta Canada
Energy Stocks

Where Will Imperial Oil Stock Be in 1 Year?

Imperial Oil is a TSX energy stock that has delivered market-thumping returns to shareholders over the last two decades.

Read more »

Pumpjack in Alberta Canada
Energy Stocks

1 Magnificent Energy Stock Down 17% to Buy and Hold Forever

Down over 17% from all-time highs, Headwater Exploration is a TSX energy stock that offers you a tasty dividend yield…

Read more »

Pumpjack in Alberta Canada
Energy Stocks

Is Cenovus Energy Stock a Good Buy?

Cenovus Energy (TSX:CVE) stock is primed for capital gains and strong total returns in 2025, driven by strategic buybacks and…

Read more »

Trans Alaska Pipeline with Autumn Colors
Energy Stocks

2 High-Yield Dividend Stocks That are Screaming Buys Right Now

Natural gas stocks like Peyto Exploration and Development are yielding above 7% today and look undervalued as natural gas strengthens.

Read more »

chart reflected in eyeglass lenses
Energy Stocks

Best Stock to Buy Right Now: Canadian Natural Resources vs Cenovus?

Want to invest in Canadian energy? Canadian Natural Resources and Cenovus Energy are two of the largest, but which one…

Read more »

oil pump jack under night sky
Energy Stocks

Where Will Cenovus Stock Be in 1/3/5 Years? 

Let's dive into whether Cenovus (TSX:CVE) stock is worth buying right now and where this stock could be headed over…

Read more »