The oil and gas sector enjoyed a bull market for the better part of 2021. Prices rebounded due to improved demand, as the global economy recovered after a brutal stretch in the previous year. Volatility has returned in force due to the rise of the Omicron COVID-19 variant. Increased restrictions across the developed world could torpedo the strong demand that has returned in 2021. Today, I want to look at three discounted energy stocks that are worth snatching up during this recent market pullback. Let’s dive in.
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Here’s why Suncor should be in your portfolio ahead of the new year
Suncor (TSX: SU)(NYSE: SU) is one of the largest integrated oil and gas companies in Canada. Shares of this energy stock have climbed 39% in 2021 as of early afternoon trading on December 15. The stock has dropped 8.1% in the month-over-month period. I’d suggested that investors should snatch up Suncor in late November.
In Q3 2021, the company delivered funds from operations of $2.64 billion, or $1.79 per common share — up from $1.16 billion, or $0.76 per common share. Meanwhile, cash flow from operating activities jumped to $4.71 billion, or $3.19 per common share, over $1.24 billion, or $0.82 per common share, in the prior year.
The company announced a quarterly dividend hike to $0.42 per share in late 2021, representing a strong 5.6% yield. Shares of this energy stock possess a favourable price-to-earnings (P/E) ratio of 18.
This top energy stock just sent off a buy signal
TC Energy (TSX: TRP)(NYSE: TRP) is a Calgary-based energy infrastructure company. This energy stock has climbed 12% in 2021 as of early afternoon trading on December 15. The stock is down 5.3% in the month-over-month period.
It unveiled its third-quarter 2021 earnings on November 5. The company delivered comparable earnings of $1.0 billion, or $0.99 per common share, in Q3 2021. Meanwhile, comparable EBITDA reached $2.2 billion. Both earnings and EBITDA were down in the year-over-year period due to some instability in its pipeline businesses in the third quarter.
Shares of this energy stock last had a P/E ratio of 30. That puts TC Energy in middling value territory compared to its industry peers. However, it has hovered in or around technically oversold territory since its mid-November plunge. It offers a quarterly dividend of $0.87 per share, which represents a very strong 5.9% yield.
One more energy stock I’d scoop up before 2022
Imperial Oil (TSX: IMO)(NYSE:IMO) is the third energy stock I’d look to snatch up in the middle of December. This stock has shot up 70% in the year-to-date period in 2021. However, its shares have dropped 4.7% over the past month.
In Q3 2021, Imperial Oil saw its net income surge to $908 million compared to a paltry $3 million in the previous year. The company delivered net income of $1.66 billion, or $2.31 per share, in the third quarter of 2021 — up from a net loss of $711 million, or $0.97 per share, in Q3 2020. It declared a quarterly dividend of $0.27 per share, which represents a 2.5% yield.
This energy stock is trading in favourable value territory relative to its competitors in this sector. I’m looking to snatch up Imperial Oil on the dip right now.
