ALERT: Are Energy Stocks Headed Lower This Week?

Top Canadian energy stocks like Suncor Energy Inc. (TSX:SU)(NYSE:SU) and others have been hit by volatility and lower oil prices in late April.

| More on:
warning or alert

Image source: Getty Images

The Russian invasion of Ukraine on February 24, 2022, has sparked a geopolitical crisis and general chaos in the energy sector. NATO allies and European nations looked to exact significant sanctions on the Russian economy in response to the aggression. This threatened to cut off and disrupt one of the world’s leading oil and gas suppliers. Canadian energy stocks rose sharply in response and oil and gas prices soared. However, volatility has recently reared its head in the energy sector. Today, I want to discuss this phenomenon and look at two top Canadian energy stocks that will likely be impacted.

Why energy stock investors have seemingly turned bearish in late April

Back in early March, I’d recommended that investors look to take advantage of the oil bull market. At the time, the price of WTI crude has surged above the US$120 mark. It is trading below US$100/barrel as of pre-market open on April 25. Meanwhile, the price of Western Canadian Select (WCS) also surged above the $100/barrel mark. It was priced at $87/barrel at the time of this writing. Predictably, Canadian energy stocks have been negatively impacted.

There are several developments that have led to bearish sentiment in the oil space. A dip in Chinese demand has had an impact. However, the fears of a global economic slowdown have almost certainly been the most significant factor. The International Monetary Fund (IMF) slashed global growth forecasts in the face of the Russia-Ukraine war.

Where are Canada’s top energy stocks heading?

The S&P/TSX Capped Energy Index fell 1.9% on Friday, April 22. This occurred on the same day that the TSX suffered a 464-point loss. Canadians need to keep an eye on the top domestic energy stocks.

Suncor (TSX:SU)(NYSE:SU) is one of the largest integrated energy companies in Canada. Shares of this energy stock fell 4.2% week over week as of close on April 22. The stock was still up 23% in the year-to-date period.

In 2021, Suncor benefited from soaring oil and gas prices. Net earnings rose to $4.11 billion in 2021 — up from a net loss of $4.31 billion in the previous year. Shares of Suncor still possess a very solid price-to-earnings ratio of 14. It offers a quarterly dividend of $0.42 per share, which represents a 4% yield.

Imperial Oil (TSX:IMO)(NYSE:IMO) is another top energy stock that investors should watch this week. Its shares have plunged 4.4% week over week. Imperial Oil stock is still up 30% so far this year.

Investors can expect to see its first-quarter fiscal 2022 results on April 29. In 2021, the company delivered net income of $2.47 billion — up from a net loss of $1.85 billion in 2020. Meanwhile, Imperial Oil saw annual upstream production reach a 30-year high.

Should you bail on this sector before May?

Back on April 13, I’d suggested that investors may want to take profits in some of the top energy stocks. The situation looks even more precarious for this sector today. Fortunately, it is not too late for Canadian investors to take profits in a volatile market.

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 Ambrose O'Callaghan 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 »