2 Canadian Oil Stocks That Have Had Huge Gains in 2022

Oil pipes in an oilfield

Written by Adam Othman at The Motley Fool Canada

The energy sector is one of main growth drivers for the Canadian economy today. It has one of the largest energy sectors in the world. The strength of Canada’s energy sector is a double-edged sword, as energy crises can negatively impact Canadian financial markets. But when oil prices rise and demand skyrockets, it improves the performance of the market as a whole.

The energy industry has been in tears since lockdowns began to ease last year. many of the strongest growth stocks on the TSX have come from the energy sector for several months. Several energy stocks have seen tremendous growth and still have the potential to produce much more due to the current geopolitical climate.

Today I will be discussing two such Canadian oil stocks that have seen huge increases so far in 2022.

Imperial Oil

Imperial Oil (TSX: IMO) (NYSE: IMO) is a Canadian oil company with a market capitalization of $41.94 billion headquartered in Calgary. The integrated energy company has upstream and downstream businesses that generate significant cash flow. Imperial doesn’t have the production capacity of some of the biggest oil producers, but it keeps improving its production costs and profit margins.

It is in its downstream activities that it enjoys competitive advantages in the industry, as it is the largest national refining company. It is also the largest asphalt retailer in Canada. Soaring oil demand is the perfect opportunity for Imperial to post explosive growth. Imperial Oil shares are trading at $62.68 per share to the press, and they offer a dividend yield of 2.17% to the press.

Tourmaline Oil

Tourmaline Oil (TSX: TOU) is a $19.65 billion market capitalization natural gas liquids company headquartered in Calgary. The company presents itself as a producer of natural gas liquids, but it also has significant crude oil production activities. It relies primarily on its position as the largest natural gas producer for its price movements in the stock market, but it has benefited from rising oil prices.

The company is well past the challenges it faced due to the initial outbreak of COVID-19. The discount to its valuation due to the pandemic-induced crash was nothing compared to the massive increase in its valuation when the energy sector picked up the pace last year. Shares of Tourmaline Oil are trading at $59.26 per share at writing, and they offer a dividend yield of 1.35% at writing.

Insane takeaways

Remember that there is an inherent risk in any investment in the stock market, and invest in growth stocks carries a greater risk. Oil prices began to rise last year due to global travel restrictions and cooling lockdowns. Pent-up demand for travel has driven energy prices up sharply as oil producers rush to meet demand.

Rising geopolitical tensions have left one of the world’s largest oil producing countries in a state of economic vacuum. Uncertainty surrounding the Russian-Ukrainian war has led to a larger rise in oil prices, but the factors could just as easily reverse oil prices.

Suppose you are willing to take the risk of investing in oil stocks and remain bullish on oil prices. In this case, Tourmaline and Imperial Oil stocks could be viable investments to consider.

The post 2 Canadian oil stocks that have seen huge gains in 2022 appeared first on The Motley Fool Canada.

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Fool contributor Adam Othman has no position on any of the stocks mentioned. The Motley Fool has no position in the stocks mentioned.


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