Attention: This Stock Has Soared 24% in Just 2 Weeks!

Birchcliff Energy Ltd. (TSX:BIR) rallies 24% in May as it reports explosive cash flow growth and as it remains massively undervalued.

| More on:
Arrowings ascending on a chalkboard

Image source: Getty Images.

Do you want to find the next sector that will be the outperformer in the market for the remainder of 2019?

This stock that has soared 22% in just two weeks may be the place to start.  The next place to put your money as the market continues to flirt with all-time highs and as trade tensions, consumer debt, and a rocky housing market continues to dim economic prospects going forward.

New life is being breathed into energy stocks in general in the last couple of weeks, as we continue to see strong results from energy companies that are looking increasingly undervalued today.

Investors are still not interested in the energy space. They are afraid because of all the negative headline news and the real problems that have plagued the industry.

At this point, however, we must take notice because energy stocks are generating cash flows that are adding value to the companies and to shareholders, and they are turning to a focus on returning this capital to shareholders rather than deploying it back into their businesses.

This, in turn, will reduce supply and improve the fundamentals of oil and gas pricing, while directly increasing shareholder value through dividend payments and a reduction in shares outstanding.

This is the opportunity.

Birchcliff Energy Ltd. (TSX:BIR), a $960 million natural gas producer that just reported record first-quarter earnings and cash flow numbers, has rallied 24% in just two weeks as investors begin to take notice.

And it’s hard not to take notice. This stock, trading at a price to cash flow multiple of 2.6 times at writing, is painfully cheap despite the fact that it is a high-quality company with a large undeveloped land base and access to a considerable amount of low risk drilling locations.

First-quarter adjusted funds from operations per share increased 44%, EPS increased 20%, operating expense per boe declined 10%, and a very strong balance sheet with a debt to capitalization ratio of only 27%.

Outstanding results plus a dividend yield of 2.72%, yet the company, along with many other energy companies, is being shunned by investors.

Tourmaline Oil Corp. (TSX:TOU) is another natural gas stock that is posting exceptional results, yet not seeing the love from investors.

Trading at 3.5 times cash flow at writing, this undervalued company has just reported a 20% dividend increase and an 18% increase in cash flow per share, as it maintains a strong balance sheet that will ensure that this company will make it through the difficult times.

Final thoughts

Many energy stocks, such as Birchcliff and Tourmaline, are trading at cyclical lows while generating strong cash flows, operating results, and maintaining strong balance sheets.

It is only a matter of time before they roar even higher. Position yourself now.

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 Karen Thomas owns shares of BIRCHCLIFF ENERGY LTD.

More on Dividend Stocks

Two seniors float in a pool.
Dividend Stocks

TFSA: How to Earn $1,890 in Annual Tax-Free Income

Plunk these investments into your TFSA to earn passive income and avoid the taxman.

Read more »

Engineers walk through a facility.
Dividend Stocks

1 TSX Stock I Wouldn’t Touch With a 10-Foot Pole

AtkinsRéalis (TSX:ATRL) is one TSX stock I'd never invest in.

Read more »

edit Woman in skates works on laptop
Dividend Stocks

3 No-Brainer Stocks to Buy Under $30

These three stocks all offer a huge deal for investors looking for dividends, as well as growth that will last.

Read more »

You Should Know This
Dividend Stocks

How to Convert a $300 Monthly Investment Into $338 in Monthly Income

If you want a certain amount in monthly passive income, invest a similar amount today and leave the rest to…

Read more »

Increasing yield
Dividend Stocks

3 Income Stocks With Big Yields to Consider in April 2024

If you haven’t yet made your March investments, here are three income stocks to buy the dip and lock in…

Read more »

Senior Man Sitting On Sofa At Home With Pet Labrador Dog
Dividend Stocks

RRSP Investors: Don’t Miss Out on This Contribution Hack!

This hack has so many benefits for you -- not just when you put it in your RRSP but for…

Read more »

A red umbrella stands higher than a crowd of black umbrellas.
Dividend Stocks

Passive Income: 2 Safe Dividend Stocks to Own for the Next 10 Years

Dividend stocks such as Manulife and Fortis can help you generate a stable and recurring passive-income stream.

Read more »

Young woman sat at laptop by a window
Dividend Stocks

3 Dividend Stocks Everyone Should Own for the Long Haul

For investors looking for top-tier dividend stocks to buy and hold for the long term, here are three of my…

Read more »