Oil to $100? Buy These 3 Canadian Oil Stocks

Three Canadian oil stocks should be on top of your buy list in December 2021 as crude prices approach US$100 per barrel.

| More on:
oil and gas pipeline

Image source: Getty Images

Oil prices could be heading higher, if not to US$100 per barrel soon. Right now, demand far exceeds supply because countries are starting to ease restrictions, and some are ending nationwide lockdowns. Meanwhile, the United States might release strategic reserves to temper the rapidly rising fuel prices.

However, if OPEC+ does not pump more oil, nothing can cool down the market. On the stock market, investors should be scouting for oil stocks to buy. Birchcliff Energy (TSX:BIR), Enerplus (TSX:ERF)(NYSE:ERF). and Whitecap Resources (TSX:WCP) trades at relatively low prices despite year-to-date gains of up to 300%. Snag one or all before they skyrocket again.

Outsized gains

Birchcliff Energy has a spectacular run in 2021. At $7.30 per share, the year-to-date gain is a whopping 313.89%. The $1.94 billion intermediate oil and natural gas company delivered exceptional operational and financial results in Q3 2021. Its President and CEO, Jeff Tonken, highlight the record quarterly record adjusted funds flow ($168.1 million and free funds flow ($150.1 million).

Management also reported an 8% increase in quarterly average production versus Q3 2020. Likewise, the net income of $138.4 million was a record. Birchcliff lost $17.7 million in the same quarter in 2020. For its preliminary outlook for 2022, the company expects to generate around $650 million and $400 million in adjusted funds flow, and free funds flow, respectively.

Explosive returns

Enerplus isn’t far behind Birchcliff in terms of explosive returns. The share price is $13.43, a 243.06% year-to-date gain. Also, the overall return to would-be investors should be higher if you include the modest 1.22% dividend. Because of the strong cash flows in Q3 2021, management announced an 8% increase in dividends.

Like most in the energy sector, this $3.42 billion crude oil and natural gas company reported vastly improved financial results in 2021. In the nine months ended September 30, 2021, Enerplus delivered US$67 million in net income. The company’s net loss in the same period last year was US$719.2 million.

Furthermore, Enerplus commits to return a significant portion of free cash flow to shareholders and evaluate further cash returns in 2022. Any excess free cash flow not returned to shareholders will be for balance sheet reinforcement.

CPPIB stock

Whitecap Resources hasn’t gained as much as Birchcliff Energy and Enerplus. However, at $7.57 per share (+55.5% year-to-date), the energy stock pays a 3.68% dividend. Thus, you can earn two ways: price appreciation and dividend payouts. For this $4.64 billion company, the financial and operational momentum continues.

After three quarters in 2021, petroleum and natural gas revenues increased 162.5% to $1.74 billion versus the same period in 2020. Whitecap is back to profitability, too, with its net income of $1.55 billion versus the $2.17 billion net loss a year ago. In Q3 2021, production increased significantly by 74% versus Q3 2020.

Whitecap expects around 3% to 5% growth and growing capital return to shareholders through dividends and share buybacks regarding the business outlook. Finally, it might interest you to know that the Canada Pension Plan Investment Board (CPPIB) owns shares of this growth stock.

Low spare oil capacity

According to published reports, the oil supply will not increase anytime soon. Even if OPEC+ and its allies want to bring down prices, spare oil capacity must increase first. Hence, the price could potentially reach US$100.

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 Christopher Liew has no position in any of the stocks mentioned. The Motley Fool 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 »