Energy stocks continue to be some of the best stocks for Motley Fool investors to consider. Vaccination rates continue to climb, which means production is ramped up. There is an increased demand for pipelines, oil, gas, and utilities. But not every energy stock is created equal. Here are four energy stocks I would consider above the rest if looking at the TSX today.
Pembina Pipeline (TSX:PPL)(NYSE:PBA) got a recent boost recently when Inter Pipeline exited an acquisition by the company. The good news? It handed over $350 million to Pembina stock for breaking the deal. But it was good news even before this, with strong earnings ahead of Pembina stock.
It’s predicted among energy stocks the company could see an EBITDA of $858 million for the quarter. In fact, some believe the company’s marketing segment will outperform the market, leading to even higher EBITDA guidance.
Shares of Pembina stock are up 32% in the last year. Yet energy stocks like this remain a steal. It currently sports a dividend yield of 6.4%, with a price-to-book (P/B) ratio of 1.8! As the company continues to bring in growing cash, Motley Fool investors would do well to pick up this stock as a long-term investment on the TSX today.
Investors continue to underestimate Canadian Utilities (TSX:CU). The company has a strong balance sheet, plenty of room for growth, continues to give investors strong returns and has a projected total return of above 15%. There is so much growth in store for this company that’s invested in oil, gas, and renewable energy sources. That makes it a steal among energy stocks for Motley Fool investors on the TSX today.
Shares of the stock are up 12% in the last year. And while it’s not likely that it will explode in share price in the immediate future, the growth opportunities make this a strong long-term investment. Over the last two decades, Canadian Utilities has seen a compound annual growth rate (CAGR) of 9.98%. That rate is likely to increase further as it expands into the developing renewable energy sector.
It’s earnings season, and Motley Fool investors should definitely consider adding Hydro One (TSX:H) to their prospective energy stocks list. Hydro One saw its earnings continue to rise in the last quarter, and with earnings around the corner on August 10, it’s likely we’ll continue to see this trend.
Similar to Canadian Utilities, Hydro One is likely to see an increase in demand as Canada moves towards renewable energy sources. But even before that, as vaccination rates rise that means a return to work. This will see a massive increase in hydro activity with businesses and office buildings returning to full power.
Shares are up 13% for the last year, but this is a cheap stock with a P/E ratio of just 10! Plus you can add an additional 3.51% in dividends each year.
For a strong buy recommended by analysts, investors should also consider AltaGas (TSX:ALA). The midstream and utility company is another perfect option for those seeking immediate returns from the oil and gas sector, and future returns for renewable energy sources.
The company’s growing midstream assets will provide revenue with the increase in gas demand. And it remains low risk among energy stocks with long-term contracts and consistent new customers added to its portfolio. It’s also gained access to Asian markets for future growth.
Shares of the stock are up a whopping 66% in the last year, and it offers a 3.8% dividend yield as of writing. Yet it remains a relative deal with a P/E ratio of 20 and a P/B ratio of 1.2. With earnings this week, today’s investor may be witness to a quick boost in share price from another likely positive quarter.
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 Amy Legate-Wolfe owns shares of PEMBINA PIPELINE CORPORATION. The Motley Fool recommends ALTAGAS LTD. and PEMBINA PIPELINE CORPORATION.