As the stock market continues to recover, several TSX stocks suddenly seem more attractive investments than for the better part of a year or more. As of this writing, TC Energy (TSX:TRP) stock is up by 18.44% from its 52-week low levels from October 2023. For investors who missed the start of this rebound, there might be plenty more reasons to consider this an undervalued stock with more growth potential.
Today, we will take a closer look at what has been happening and some developments that TC Energy has made, which suggest that it can outperform many of its industry peers.
TRP stock
TC Energy stock’s recent jump in share prices has seen it recover to its June 2023 levels. Despite the uptick, it still has a long way to go before it matches its pre-pandemic heights. Macroeconomic troubles like rising interest rates and inflation combined with significant issues with a major project saw TRP stock share prices decline over the last year.
Like other energy companies, TC Energy relies heavily on debt to fund its capital programs. Due to higher borrowing costs in an already uncertain market, the company has seen its profits and cash available to minimize debt and pay dividends negatively impacted.
New pipeline projects often cost billions of dollars and several years to build. The Coastal GasLink pipeline that received the go-ahead in 2018 is the perfect example of it. The 670-km long natural gas pipeline project originally had a $7 billion budget, but that was before the pandemic.
As development began, the pandemic, inflation, and environmental factors caused considerable delays, driving the cost to $14.5 billion. That said, the project has finally been completed.
While TC Energy stock has faced substantial challenges due to the project, the business itself did not do as badly as many investors might think. The company’s management expects its adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA) to grow by 8% by the end of fiscal 2023 compared to the previous fiscal year.
In other news, TC Energy sold off its stake in several American assets to recover $5.3 billion, and it expects to raise another $3 billion this year. The company also plans to potentially sell off its assets in Mexico to raise more cash and support ongoing capital projects without taking on additional debt. TC Energy also plans to spin off its oil pipeline business.
Foolish takeaway
Due to its solid core business, TC Energy is a popular holding for many income-seeking investors with its monthly distribution schedule. If you are an investor creating a passive-income stream in your self-directed investment portfolio, TC Energy stock can be an excellent way to line your account balance with cash from monthly dividends.
As of this writing, TC Energy stock trades for $51.76 per share and pays its shareholders at a juicy 7.16% dividend yield. Considering its potential to continue growing shareholder value, it can be an excellent pick for investors to kick off 2024.
