3 Small-Cap TSX Energy Stocks That Doubled This Year

TSX energy stocks at large have beat broader markets this year. But that’s nothing compared to these small caps.

| More on:
Group of industrial workers in a refinery - oil processing equipment and machinery

Image source: Getty Images

Investors despised energy stocks till a few years back for their consistent underperformance. However, since the pandemic, the picture has turned upside down, and energy names are set to beat broader markets for the third year in a row. TSX energy stocks have gained 65% so far in 2022, while TSX Composite Index has rather lost 5%!

Perhaps, that’s nothing compared to some of the flourishing small caps. For example, some of the TSX energy stocks have surged 15 to 20-fold since the pandemic.

Cardinal Energy

First on our list is Calgary-based Cardinal Energy (TSX:CJ). The stock has gained 100% this year and 1,800% since the mid-2020. In addition, the company recently reinstated its dividends of $0.60 per share annually, indicating a solid yield of 6.7%. Note that Cardinal will continue to pay the same level of dividends, even if oil prices halve from here.

Cardinal is a $1.35 billion company that produces around 20,000 barrels of oil equivalent per day.

Cardinal Energy’s free cash flow increased from $52 million in Q1 2021 to $87 million in Q1 2022. Its higher production, coupled with higher prices, drove such handsome growth.

Interestingly, Cardinal Energy was left with a massive cash hoard, even after repaying a large portion of debt and allocating for capital projects. As a result, it restored shareholder dividends and might continue to aggressively pay shareholders in the future.

Cardinal showed massive improvement in cash flow and debt repayments when oil averaged around US$94 a barrel in Q1 2022. Its second-quarter performance will likely be even more vital considering current oil prices close to US$110 a barrel.

Athabasca Oil

Athabasca Oil (TSX:ATH) is another crude oil play that has doubled this year. The stock fell to $0.12 levels during the pandemic and is currently trading close to $2.5.

Athabasca Oil had $400 million in net debt at the end of 2020, which dropped to $152 million during Q1 2022. Higher oil prices drove its free cash flows since last year. So, the strengthened balance sheet has mainly been behind the steep stock rally.

Like peer TSX energy stocks, ATH will also likely head higher, driven by rallying oil and gas prices. Most importantly, the stock’s current valuation does not look stretched and implies more upside potential.

Precision Drilling

Oilfield services stock Precision Drilling (TSX:PD)(NYSE:PDS) seems to be rallying back up after a notable pullback late last month. It has already doubled this year.

Precision Drilling is a $1.3 billion company that provides an extensive fleet of contract drilling rigs, well service, camps, and rental equipment. The company reported a widened loss in Q1 2022 than last year.

Precision Drilling management conveyed its higher demand outlook amid the strong price environment. It has announced an increased capital-expenditure plan of $125 million for this year — an increase from $98 million from its previous estimate.

Higher energy commodity prices will likely keep supporting PD stock. Moreover, its improving balance sheet and strong earnings-growth prospects should drive the stock higher.

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.

The Motley Fool has no position in any of the stocks mentioned.  Fool contributor Vineet Kulkarni has no position in any of the stocks mentioned

More on Energy Stocks

energy industry
Energy Stocks

2 Energy Stocks to Buy With Oil Nearing $90/Barrel

Income-seeking investors can consider adding dividend-paying energy stocks such as Chevron to their portfolios right now.

Read more »

edit Sale sign, value, discount
Energy Stocks

Bargain Hunters: TRP Stock is the Best Dividend Deal Around!

TRP stock (TSX:TRP) offers a high dividend, but is still trading lower than 52-week highs. Now is the best time…

Read more »

oil and natural gas
Energy Stocks

Enbridge Stock: Is the Energy Infrastructure Giant Undervalued?

With Enbridge trading nearly 15% off its 52-week high, is the energy infrastructure stock worth buying today?

Read more »

Solar panels and windmills
Energy Stocks

So You Own Algonquin Stock: Is It Still a Good Investment?

Algonquin stock (TSX:AQN) was once a top investment for Canadians seeking a high dividend. But after a cut last year,…

Read more »

oil tank at night
Energy Stocks

Is Suncor a Buy, Sell, or Hold?

Suncor Energy stock is off to a strong start in 2024. Is the TSX energy stock a good buy right…

Read more »

Burning gas and electric cooker rings
Energy Stocks

2 Energy Stocks to Buy Hand Over Fist in April

These two top energy stocks are some of the best to buy due to their reliability, reasonable growth potential, and…

Read more »

Dice engraved with the words buy and sell
Energy Stocks

Is Whitecap Resources a Buy, Sell, or Hold?

Let's dive into whether Whitecap Resources (TSX:WCP) represents a buy, sell, or hold in the market at current levels.

Read more »

oil and natural gas
Energy Stocks

Dividend Investors: Top Canadian Energy Stocks for April 2024

These Canadian energy stocks are known for rewarding shareholders with higher dividend payments.

Read more »