2 oversold oil stocks to buy big by The Motley Fool

© Reuters. 2 oversold oil stocks to buy in bulk

The energy sector (+74.13%) is the bright spot in the upside environment in 2022. Almost all energy stocks are showing the best prices, although Birchcliff Energy (TSX: BIR) Peyto Exploration ( TSX:) & Development (TSX:PEY) appear to be trading below their intrinsic values.

Both oversold stocks are buying opportunities. Market analysts forecast Birchcliff to climb as high as 62.3%, while Peyto’s average return potential is 38.3%. You can buy both in bulk for a huge bargain in a year, plus extra income from dividends.

Maximizing Free Funds Flow Birchcliff Energy trades at $12.32 per share and pays a modest 0.65% dividend. Current investors are also up 90.99% year-to-date. The $3.26 billion midstream oil business operates in Alberta’s Montney/Doig resource play. Under its five-year financial plan, management expects cumulative free fund flow to reach $3.33 billion by 2026.

In the first quarter of 2022, free funds flow reached $95.4 million, compared to -$8.02 million in the first quarter of 2021. Notably, net income climbed 467% year over year to reach $125.79 million. Birchcliff CEO Jeff Tonken said, “We continue to be committed to maximizing free cash flow generation and significantly reducing leverage.

Mr. Tonken added: “Based on the strength of the commodity price environment and our strong year-to-date results, we have increased our full year 2022 guidance.” expects an adjusted fund flow of $1.18 billion and a free fund flow of between $920 million and $940 million.

The best news for investors is the plan to increase the annual common stock dividend by at least $0.80 per share in 2023. However, the target is subject to commodity prices and board approval. administration. Management said the dividend increase is achievable at an average price of US$70 per barrel. The current price of WTI is US$121.60 per barrel.

Historical Profit Margins At $16.63 per share, Peyto’s one-year price return and year-to-date gain are 187% and 79.74%, respectively. Nevertheless, the oil inventory is well positioned to rise further if commodity prices remain high throughout the year. Given that the $2.72 billion oil, natural gas and natural gas liquids (NGL) producer pays a dividend of 3.58%, the return for potential investors should be higher.

In Q1 2022, revenue and realized hedging gains increased 64% to $286.89 million from Q1 2021. Earnings increased 154% year-over-year to $97.81 million, while funds from operations were 74% higher than the same quarter in 2021. Peyto paid a total of $25.35 million in dividends, representing an increase of 1,436% compared to Q1 2021.

According to management, the combination of low total cash costs, higher production and higher realized commodity prices has resulted in an operating margin that is among the best in the industry. Peyto’s historic profit margins in the quarter drove near-record quarterly earnings. Additionally, Peyto expects to begin to fully benefit from the effect of rising commodity prices once its hedges are lifted.

Fantastic picks Birchcliff Energy and Peyton are among the best performers on the TSX in 2022. However, the two oil stocks remain fantastic picks as they seek their true values.

The post 2 Oversold Oil Stocks To Buy In Bulk appeared first on The Motley Fool Canada.

Fool contributor Christopher Liew has no position in any of the stocks mentioned. The Motley Fool has no position in the stocks mentioned.

This article first appeared on The Motley Fool


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Felix J. Dixon