Forget Tech: Here Are Top Energy TSX Stocks to Buy Right Now

Three energy stocks are well placed amid a rallying oil price environment.

| More on:
oil and gas pipeline

Image source: Getty Images

Energy stocks have been on fire of late, as crude oil is comfortably trading in the US$80s. They could see further upside if oil indeed sees US$100 per barrel, as experts opine. Energy stocks seem to offer a relatively better risk-to-reward ratio considering the unstoppable fall in tech names. Here are some of the top energy TSX stocks that are well placed amid rallying oil and gas prices.

Tourmaline Oil

Tourmaline Oil (TSX:TOU) is a combination of undervalued stock, decent dividends, and strong earnings growth potential. It has notably outperformed peers, returning more than 125% in the last 12 months.

Interestingly, this could still be a start for Canada’s leading natural gas producer. Tourmaline delighted its shareholders with another special dividend and a decent regular dividend hike last week. It has been flush with cash after rising natural gas prices boosted its financials.

Natural gas still seems to have steam left, given higher demand due to weather and full re-openings. Thus, Tourmaline management expects significant free cash flow growth this year, which should enable more cash distribution among its shareholders.

Energy stocks have been on a roll for a while now. However, they still offer a decent growth potential due to rising oil and gas prices. Tourmaline looks attractive at these prices, even if it is trading close to its record levels. The stock is trading eight times its earnings and looks discounted.

Surge Energy

After having a blockbuster year in 2021, the energy sector seems to be readying for another super year in 2022. Top TSX energy stocks doubled last year, notably outperforming broader markets. One small-cap gem that seems to stand out is Surge Energy (TSX:SGY). The stock has almost doubled in a month, remarkably outplaying bigwigs.

Apart from the supportive oil and gas prices, Surge Energy’s upbeat outlook drove the stock higher recently. The liquids-focused energy company expects $131 million free cash flow this year if oil prices average around US$75 a barrel in 2022. That’s a pretty conservative estimate considering current oil prices and could bode well for shareholder returns.

Surge Energy will repay debt with its excess cash and will likely end 2022 with a strong liquidity position. Thus, investors can expect dividend resumption, probably next year, if energy prices remain favourable.

Surge Energy stock is trading at its 52-week high. The stock looks undervalued and could continue to soar higher amid soaring energy prices.

Suncor Energy

Suncor Energy (TSX:SU)(NYSE:SU) is a little late to the party but is vigorously covering the lost ground. The stock has returned 52% in the last 12 months, underperforming TSX energy stocks’ average return of 80%.  

Suncor doubled its dividend last year when its liquidity position improved on improving macro picture. It seems well placed in 2022, mainly due to potential full re-openings. Canada’s largest oil sands player has significant downstream operations. The segment displayed a noteworthy comeback when COVID-related restrictions somewhat loosened last year. So, it is safe to assume a higher revenue contribution from its downstream segment once travel normalizes in the next few quarters.

Suncor stock is currently trading at a dividend yield of 5.5%, one of the highest across the industry. Investors can expect another dividend hike this year if energy commodity prices continue to rise and give it an earnings boost.

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.

The Motley Fool has no position in any of the stocks mentioned.  Fool contributor Vineet Kulkarni has no position in any of the stocks mentioned.

More on Energy Stocks

construction workers talk on the job site
Energy Stocks

Best Stock to Buy Right Now: Baytex vs Suncor?

Suncor and Baytex stocks both look like solid companies offering growth and dividends. But which is the better buy?

Read more »

bulb idea thinking
Energy Stocks

3 Incredibly Cheap Energy Stocks to Buy Now

Energy stocks are trending upwards on the back of several key factors. And these three continue to be top cheap…

Read more »

Pumpjack in Alberta Canada
Energy Stocks

Should You Buy Freehold Royalties Stock for its 8% Yield?

Freehold Royalties is a TSX dividend stock that offers shareholders a forward yield of 8%. But is the energy stock…

Read more »

Muscles Drawn On Black board
Energy Stocks

Is Suncor Energy Stock a Good Buy?

Suncor is on a roll in 2024. Are more gains on the way?

Read more »

profit rises over time
Top TSX Stocks

3 Reasons to Buy Enbridge Like There’s No Tomorrow

Have you considered buying Enbridge (TSX:ENB)? Here are 3 reasons to buy Enbridge today for lasting growth and income.

Read more »

oil pump jack under night sky
Energy Stocks

Is CNQ Stock a Buy for its 4.5% Dividend Yield?

CNQ stock is one of the best options out there for dividend growth. But what about value? Let's take a…

Read more »

Pumpjack in Alberta Canada
Energy Stocks

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

Imperial Oil stock is in a precarious position, so what should investors consider as we head nearer to 2025?

Read more »

construction workers talk on the job site
Energy Stocks

Is Suncor Stock a Buy, Sell, or Hold for 2025?

Suncor Energy stock is trading at its decade-high on uncertainty in the oil market. Should you buy, sell, or hold…

Read more »