2 Unstoppable Canadian Energy Stocks to Buy Now

Consider Suncor Energy (TSX:SU)(NYSE:SU) and Canadian Natural Resources (TSX:CNQ)(NYSE:CNQ).

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Energy prices have been pretty much unstoppable of late, surging above the US$100 mark before fluctuating wildly. With Russia’s invasion of Ukraine, a major source of global supply could go offline. Indeed, sanctions and all the sort could keep prices elevated for a prolonged period, even as reserves are released.

Though many top TSX energy stocks have rallied alongside the price of oil, they do remain cheap, assuming oil doesn’t fall substantially from here. Unless there’s a peaceful resolution to the Ukraine-Russia crisis, with a removal of sanctions, I simply do not see oil retreating to the depths of 2020 or 2021.

As producers ramp up and begin to rake in growing profits, I view today’s energy stocks as poised to enjoy substantial multiple compression as a result of rising profits.

The big two Canadian energy kings are rich with oil and ripe to buy now

It’s an industry environment that few saw coming. Nonetheless, it’s one that could be a boon to the players within Canada’s energy patch for many years to come. In this piece, we’ll have a closer look at Suncor Energy (TSX:SU)(NYSE:SU) and Canadian Natural Resources (TSX:CNQ)(NYSE:CNQ). These two firms are among my favourite of the larger-cap Canadian fossil fuel firms at this juncture.

Suncor Energy

Suncor Energy has been on a wild ride in recent years. Despite losing the crown to Canadian Natural, the firm still may have what it takes to regain the top spot over the next five years, as management gradually becomes more willing to turn on the spigot again. With remarkable integrated cash flows that will hold up even come an unexpected oil price meltdown, I view Suncor as having one of the best risk/reward scenarios in the oil patch for those who want to profit long term from the energy boom.

Today’s strong industry conditions won’t last forever. That’s just the nature of the oils. Once the next downcycle arrives, expect Suncor to hold its own best, making it one of my top value picks of the three names mentioned in this piece.

At 15.4 times earnings, SU stock boasts a 4% dividend yield. It’s not the most bountiful payout, but at such a low entry point, I’d argue Suncor is worth considering right here at $42 and change per share.

Canadian Natural Resources

CNQ is the new Canadian oil king in town. With the stock now up more than double over the past year and 52% year to date, questions linger as to how much more room the top firm has to run. If oil prices remain elevated, I think the rally is sustainable.

Unlike the momentum stocks in 2020, CNQ is dirt cheap, even after its parabolic run! It’s hard to believe, but the stock goes for 12.9 times trailing earnings at writing. Alongside capital gains potential, you’ll also get a 3.6% dividend yield. With brilliant managers and a plan to surge alongside higher oil, I wouldn’t stand pat on the name, even as it rockets higher by the day.

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 Joey Frenette has no position in any of the stocks mentioned. The Motley Fool recommends CDN NATURAL RES.

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