3 Energy Stocks to Buy on the Dip

An oil bear market is pushing down equities like Encana Corp. (TSX:ECA)(NYSE:ECA). However, this also presents buying opportunities ahead of the summer.

| More on:
Oil pumps against sunset

Image source: Getty Images

Oil entered a bear market early this month under global economic pressures that have rattled broader markets. Turbulence in late 2018 led to significant volatility for energy equities. Last week, I briefly discussed what investors can expect going forward in the energy sector. The average bear market for oil has lasted approximately 60 trading days. This gives investors some time to stack in the late spring and early summer.

Today, we are going to look at three stocks that sank into oversold territory over the past week.

Encana

Encana (TSX:ECA)(NYSE:ECA) is a Calgary-based independent oil and gas producer. Shares have plunged 25.6% over the past month as of early morning trading on June 10. This pushed the stock down to nearly 15% for the year.

Encana released its first-quarter 2019 results on April 30. The company reported a net loss of $245 million, or $0.20 per share, as earnings were dragged down by non-cash unrealized losses on risk management, restructuring costs, and acquisition-related costs. Encana declared a quarterly dividend of $0.01875, which represents a modest yield of 1.1%.

As we approach the halfway point in June, Encana stock boasts a forward P/E of six, which looks like great value relative to industry peers right now. Shares had an RSI of 24 as of this writing, which puts Encana stock in technically oversold territory.

Baytex Energy

Baytex Energy (TSX:BTE)(NYSE:BTE) is another Calgary-based company that engages in the exploration for and production of heavy crude oil, light crude oil, and natural gas in Western Canada and south Texas. Shares have dropped 26.8% month over month as of morning trading on June 10. The stock has mirrored the percentage drop of Encana in 2019.

In the first quarter, Baytex generated production of 101,115 barrels of oil equivalent per day, which exceeded the high end of its annual guidance. Adjusted funds flow surged to $221 million, or $0.40 per share, compared to $111 million, or $0.20 per share, in the prior year. This was due to a strong performance coupled with an improved commodity price environment.

Baytex had an RSI of 30 as of this writing, putting the stock just outside technically oversold territory.

Cenovus

Cenovus (TSX:CVE)(NYSE:CVE) is our final Calgary-based integrated oil company. It is focused on the development of its oil sands assets. Shares have fallen 9.3% over the past month. The stock is still up 13.9% in 2019 so far.

Cenovus began earnings season for the oil patch with a miss, which resulted in a 7% cut to its output forecast. Unlike some other producers, Cenovus has been a vocal supporter of Alberta’s decision to curtail production output in order to boost Canadian crude prices. In its first-quarter report, the company said that the new policy led to an improvement in prices that more than offset the impact of reduced production. The company last paid out a quarterly dividend of $0.05 per share, which represents a modest 1.8% yield.

Cenovus stock had an RSI of 41 as of this writing. Shares have managed to climb out of oversold territory quickly, but the stock is still at the low end of its 52-week range.

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 Ambrose O'Callaghan has no position in any of the stocks mentioned.

More on Energy Stocks

Oil pumps against sunset
Energy Stocks

A Dividend Giant I’d Buy Over Suncor Energy Stock

Suncor Energy stock has crushed the broader markets in the last 20 years. But this TSX energy stock has beaten…

Read more »

oil tank at night
Energy Stocks

2 Incredibly Cheap Energy Stocks to Buy Now

Two cheap energy stocks are the best deals in TSX’s top-performing sector in 2024.

Read more »

grow dividends
Energy Stocks

Growth Spurt: 2 TSX Stocks Set to Skyrocket

Two growth stocks in expanding, niche markets are set to skyrocket further in 2024 and beyond.

Read more »

Nuclear power station cooling tower
Energy Stocks

Why Shares of Cameco Are Powering Higher

Cameco (TSX:CCO) shares have surged more than 400% in the last five years alone, with more growth on the way.

Read more »

stock analysis
Energy Stocks

Is Enbridge Stock a Good Buy in May 2024?

Boasting high-yielding dividends and a stable underlying business, Enbridge (TSX:ENB) might be a great buy for your self-directed investment portfolio…

Read more »

You Should Know This
Energy Stocks

Brookfield Infrastructure Is Up 9% After Earnings: What Investors Need to Know

A large-cap stock with a low-risk and strong revenue profile is an investment opportunity for income, growth, or both.

Read more »

Group of industrial workers in a refinery - oil processing equipment and machinery
Energy Stocks

2 No-Brainer Energy Stocks to Buy Right Now for Less Than $500

Here are two rallying Canadian energy stocks you can buy today with attractive dividend yields and growth potential.

Read more »

edit Businessman using calculator next to laptop
Energy Stocks

Could This Undervalued Stock Make You a Millionaire One Day?

It's been a long wait, but Ballard Power finally seems to be gaining the kind of momentum that's game changing.

Read more »