Ups and Downs of 5 Energy Stocks

Will Suncor Energy Inc. (TSX:SU)(NYSE:SU) and Cenovus Energy Inc (TSX:CVE)(NYSE:CVE) have another run before internal combustion engines vehicles are taken off the road?

France and the United Kingdom are joining the list of countries that have pledged to wipe out internal combustion engines from their roads. This brave new automotive world is being led by the Netherlands, which has an end date target for the conventional vehicle by 2025.

Between now and then, TSX investors should decide how much exposure they want to oil. Does oil have another multi-year run? There might be something to be said about the strong Exxon Mobil move in September, but I do not have a lot of confidence in the oil turnaround predictions. Try as they might, energy experts are looking to call the decisive change in price, that is, an inflection point.

Are there safer bets among TSX oil stocks? Consider the following.

Name Market Cap (billion) Price Off from SMA 200 (%) Support Level (%) Dividend Yield (%) Sept
move
Suncor Energy Inc. (TSX:SU)(NYSE:SU) 69.07 41.63 1.1 -4.6 3.13 up 6%
Cenovus Energy Inc. (TSX:CVE)(NYSE:CVE) 13.65 11.11 -30.5 -15.1 1.82 up 14%
Altagas Ltd. (TSX:ALA) 4.72 27.52 -11.6 0.0 7.61 down 1%
TransAlta Corporation (TSX:TA)(NYSE:TAC) 2.17 7.54 -0.7 -6.5 2.13 down 2%
Baytex Energy Corp. (TSX:BTE)(NYSE:BTE) 0.81 3.43 -29.7 -18.0 0 up 9%

Source: Google Finance

Suncor has already made a move for the month, having just passed the 200-day simple moving average (SMA). It is the largest company on this list and a portfolio favourite for this sector.

Cenovus has also made a 14% move in the upward direction to start the month. It is still far below the 200-day SMA. The support level for Cenovus is considerably lower compared to Suncor, so buying Cenovus at these levels may require fortitude if there is a precipitous drop. Having said that, this stock has a significant upside.

Altagas has the biggest dividend yield on this list at 7.6%. This is accompanied by a very high payout ratio. On a positive note, this company recently turned the free cash flow around to a positive level. The stock continues to bounce around a bottom, so there is a double-digit upside for this stock if it gets back to the 200-day SMA.

TransAlta is trading decidedly at its 200-day SMA and is within 6% of its next support level. This energy stock is diversified, so it is not a pure play on oil. Now appears to be a solid entry point.

With its small market cap, Baytex has moved up 9% in September and is still 30% off its 200-day SMA. There is a potential upswing with Baytex that has to be balanced against its potential to drop back down 18% to where it found a bottom back in July.

Depending on your risk tolerance, there are oil choices. The long-term prospects of oil may appear ominous, but a lot more than pledges has to happen before oil becomes obsolete.

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 Brad MacIntosh has no positions in any stocks mentioned. The Motley Fool owns shares of ExxonMobil. Altagas is a recommendation of Stock Advisor Canada.

More on Energy Stocks

Arrowings ascending on a chalkboard
Energy Stocks

Beat the TSX With This Cash-Gushing Dividend Stock

Canadian Natural Resources stock is well set up to beat the TSX as it continues to generate strong cash flows…

Read more »

energy industry
Energy Stocks

2 TSX Energy Stocks to Buy Hand Over Fist Now

These two rallying TSX energy stocks can continue delivering robust returns to investors in the long term.

Read more »

green energy
Energy Stocks

1 Magnificent TSX Dividend Stock Down 37% to Buy and Hold Forever

This dividend stock has fallen significantly from poor results, but zoom in and there are some major improvements happening.

Read more »

oil tank at night
Energy Stocks

3 Energy Stocks Already Worth Your While

Here's why blue-chip TSX energy stocks such as Enbridge should be part of your equity portfolio in 2024.

Read more »

Solar panels and windmills
Energy Stocks

1 Beaten-Down Stock That Could Be the Best Bet in the TSX

This renewable energy stock could be one of the best buys you make this year, as the company starts to…

Read more »

Dice engraved with the words buy and sell
Energy Stocks

Is Enbridge Stock a Buy, Sell, or Hold?

Here's why Enbridge (TSX:ENB) remains a top dividend stock long-term investors may want to consider, despite current risks.

Read more »

Gas pipelines
Energy Stocks

If You Had Invested $5,000 in Enbridge Stock in 2018, This Is How Much You Would Have Today

Enbridge's high dividend yield hasn't made up for its dismal total returns.

Read more »

Bad apple with good apples
Energy Stocks

Avoid at All Costs: This Stock Is Portfolio Poison

A mid-cap stock commits to return more to shareholders, but some investors remember the suspension of dividends a few years…

Read more »