ALERT: Why I’m Buying Energy Stocks in May

Oil prices have regained momentum, which should spur Canadians to look at top energy stocks like Suncor Energy Inc. (TSX:SU)(NYSE:SU).

| More on:
Canadian energy stocks are rising with oil prices

Back in March, I’d discussed the ongoing bull market for the oil and gas sector. Energy prices had already gained significant momentum in 2021. However, that kicked into high gear, as inflation rates soared in the first months of this year. The Russian invasion of Ukraine in February further destabilized the oil and gas space. Today, I want to discuss why it may be worth jumping back into energy stocks, even in the face of a highly volatile market.

Here’s why energy stocks just became more attractive

In the middle of April, I’d discussed whether it made sense for Canadian investors to take profits in top energy stocks. It has become increasingly difficult to project its trajectory in an uncertain market. On one hand, oil and gas prices could be bolstered by rising inflation and the ongoing geopolitical crisis in Europe. However, a weakening global economy and efforts to boost supply could also stomp out this bull market.

The case for the bull market strengthened after Europe proposed a ban on Russian oil imports. This was pushed forward in response to the ongoing war in Ukraine that has devolved into a humanitarian catastrophe. If Europe moves forward with this proposal, it will further limit global supply. I’m looking to take a chance on energy stocks that have been throttled in a choppy market to start the month of May.

You can trust these energy heavyweights for the long haul

Suncor (TSX:SU)(NYSE:SU) is the first top energy stock I’d look to snatch up today. Its shares have climbed 42% in 2022 as of close on May 5. The stock has seen its growth slow over the past week.

Investors can expect to see Suncor’s first-quarter 2022 earnings on Monday, May 9. Suncor saw its earnings bounce back nicely in 2021 on the back of strong production and improved oil and gas prices. This energy stock currently possesses a favourable price-to-earnings (P/E) ratio of 17. It offers a quarterly dividend of $0.42 per share, which represents a 3.5% yield.

Canadian Natural Resources (TSX:CNQ)(NYSE:CNQ) is a Canadian energy stock that recently rose above a $100 billion market cap. However, it has since treated to the high 90s. This energy stock is up 49% in the year-to-date period. Its shares are up 102% year over year.

The company unveiled its first-quarter 2022 earnings as markets opened on May 5. It reported net earnings of $3.1 billion, or $2.63 per diluted share in Q1 2022 — up from $1.38 billion, or $1.16 per diluted share, in the previous year. Canadian Natural Resources has also benefited from higher oil prices. Its shares possess an attractive P/E ratio of 12 at the time of this writing. Moreover, it last paid out a quarterly dividend of $0.75 per share. That represents a 3.6% yield.

One more energy stock I’d snag on the dip today

Imperial Oil (TSX:IMO)(NYSE:IMO) is the third and final energy stock I’d look to snatch up after this weekend. Shares of Imperial Oil are up 42% so far this year. It released its first-quarter 2022 results on April 29.

First-quarter net income increased $781 million year over year to $1.17 billion. Meanwhile, it delivered cash flow from operating activities of $1.91 billion, which was a three-decade high. Imperial Oil possesses a favourable P/E ratio of 19. It offers a quarterly dividend of $0.34 per share. This represents a 2% yield.

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 recommends CDN NATURAL RES.

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 »