Breaking News: Suez Canal Troubles Could Spike Oil This Week

Here’s why Suncor Energy (TSX:SU)(NYSE:SU) remains one of my top picks for long-term investors to consider today.

| More on:
Person Hands Opening Mailbox To Remove Newspaper

Image source: Getty Images

Many investors may have already heard about the issues surrounding the Suez Canal blockage. It’s big news, as investors are beginning to price in the effects of this blockage in stocks today.

Oil prices surged last week on the news, as refiners began complaining of supply shortages. Indeed, depending on how long this situation takes to get resolved, certain stocks could be worth watching right now.

Here’s why I think investors may want to consider getting in on the oil trade this week, while it still has legs.

Suncor: The top way to play oil today

For investors seeking leverage to the price of oil in today’s volatile environment, Suncor Energy (TSX:SU)(NYSE:SU) is the way to go.

I think this stock is a great long-term holding regardless of this recent news. However, there’s a really strong case that can be made right now that Suncor could outperform in the near term as well. Accordingly, I think investors ought to take note.

This oil producer is highly leveraged to the price of oil. Indeed, the company’s stock price during last year’s oil debacle gives some investors nightmares about the downside risk this provides.

However, fortunately, a rising oil price environment is extremely bullish for Suncor investors. Commodity price leverage works in both directions, so for those who believe oil prices are likely to continue ripping to the upside, this is a name to own right now.

Excellent long-term portfolio holding

As mentioned, Suncor is a top pick of mine for long-term investors. These short-term moves are great for those looking to time entry points into the market. However, for those with a sufficiently long investment time horizon, these moves will likely end up being blips on the radar.

For world-class investors like Warren Buffett, Suncor is a long-term holding. The Oracle of Omaha has been bullish on this Canadian name over the years. Indeed, he’s grown his position in recent quarters, signaling that this is a strong pick right now. Any time he’s in, I’m immediately intrigued.

Of course, riding the coattails of one of the greatest investors of all time isn’t a bad strategy.

Bottom line

Due to the company’s leverage to the price of oil, this is a top pick for oil bulls right now. I’d highly encourage investors (and traders, alike) looking at recent moves in oil prices to consider Suncor today.

That said, should oil prices dip, I think doing the “Buffettesque” thing and adding to this position makes sense. In my view, Suncor isn’t a short-term trade — it’s a long-term winner.

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 Chris MacDonald has no position in any of the stocks mentioned.

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 »