CES Energy Solutions (TSX:CEU) is a Calgary-based company that provides consumable chemical solutions throughout the life-cycle of an oilfield. It has performed well to start this year, along with other top equities in the oil and gas space. Today, I want to discuss why CES Energy is still discounted at the time of this writing.
Why this oil stock has spiked to start the year
Shares of this oil stock have climbed 5.5% week over week as of mid-morning trading on January 28. The stock has increased 10% in the year-to-date period. CES Energy has jumped 58% from the same time in 2021.
Oil stocks have been a solid target over the past year. Fortunately, it looks like this sector still has room to run in 2022.
Where is oil going from here?
When this year started, I’d discussed why investors should consider betting on energy stocks. The space has continued to benefit from tight supply on a global level. Meanwhile, tensions between Russia and Ukraine have worsened in recent weeks. The prospect of a wider war, potentially involving NATO allies, has sparked concerns that such a conflict could further negatively impact global oil and gas supply.
The Biden administration recently warned Ukraine that Russia may choose to launch an invasion in February, taking advantage of weather that will lead to frozen ground. This would make the transportation of heavy equipment easier. Investors need to keep their eyes on the oil and gas space during this tumultuous period. Russia, for its part, has denied that it has any intention to partake in an invasion.
Prices for WTI crude have climbed by more than US$10 in the month-over-month period at the time of this writing. Meanwhile, Western Canadian Select (WCS) prices have enjoyed a similar increase. It is not too late to get in on top oil stocks.
Should you buy CES Energy stock today?
CES Energy is expected to release its fourth-quarter and full-year 2021 earnings on March 9, 2022. In Q3 2021, the company delivered total revenue of $314 million — up 89% from the prior year. Revenue in the year-to-date period rose 23% to $828 million. Meanwhile, funds flow from operations increased 52% to $83.7 million in the first nine months of 2021.
The company was powered by improved conditions in the oil industry in the third quarter. Meanwhile, it managed to bolster rig activity, deliver improved volumes, and higher prices. It expects that these conditions will continue through the rest of 2022 on the back of a strengthened oil space.
Shares of this oil stock possess a price-to-earnings ratio of 9.1 at the time of this writing. That puts CES Energy in attractive value territory. This oil stock last paid out a quarterly dividend of $0.016 per share, which represents a 2.7% yield. Investors should still look to snatch up CES Energy as we look ahead to February.