It’s been a tough month for tech stocks. Over the last 30 days, the NASDAQ 100 has fallen 7.3%. Canadian tech stocks like Shopify are in the same boat, down much more than the market averages over a one-month timeframe. A number of factors have been cited to explain the persistent weakness in tech — valuation, rising interest rates, and strength in value stocks being chief among them.
If you had invested your money in an S&P 500 index fund over the last month, you’d be down significantly — mainly because of tech. If, however, you had invested in a Canadian energy ETF, you’d be way up. The price of oil has risen over the last month and taken TSX oil & gas companies along with it. In this article, I will look at three TSX energy stocks that crushed it while tech stocks sank.
Suncor Energy (TSX:SU)(NYSE:SU) is one Canadian energy stock that has absolutely crushed it over the past month. In that timeframe, it has risen 15.18%, while tech stocks have slid. It’s not hard to understand why SU is rising. It’s an integrated energy company that makes money by selling oil and gas products. It sells oil wholesale and sells gasoline direct to consumers at its Petro-Canada gas stations. This business activity becomes more profitable when the price of oil goes up. We saw that in the most recent quarter. In Q2, Suncor’s operating income was $722 million and net income was $868 million. Both metrics were negative for the same quarter in 2020. So, the oil and gas recovery is treating Suncor well.
Enbridge (TSX:ENB)(NYSE:ENB) is another Canadian energy stock that is rallying along with the price of oil. Up 2% over the last week, it beat the NASDAQ over the same period. Enbridge’s gains have not been as strong as Suncor’s. Unlike the latter company, Enbridge doesn’t directly profit from higher oil prices. As a pipeline company, it charges transportation fees; it doesn’t directly sell oil. So, its response to higher oil prices is more muted than Suncor’s is. Still, it’s a pretty good stock with a stellar 6.6% dividend yield. It’s definitely worth looking into.
Cenovus Energy (TSX:CVE)(NYSE:CVE) is another integrated energy company like Suncor. It extracts, refines, and sells oil. Much like Suncor, it has its own chain of gas stations (Husky Energy) that make more money when the price of gasoline rises. You’ve probably noticed that the cost of filling up your tank has been rising. Cenovus is a direct beneficiary of that.
Cenovus’s most recent quarter was pretty solid. In the quarter, the company delivered $1.36 billion in cash from operations, $1.8 billion in adjusted funds flow, and $224 million in net income. All of these metrics were negative in the same quarter in 2020. So, CVE, just like SU, is benefitting from the rising price of oil.