2 of the Best Canadian Midstream Energy Stocks to Buy Now

If you’re looking to buy high-quality energy stocks that are reliable and that you can hold for years, here are two of the best to consider.

| More on:
Canadian energy stocks are rising with oil prices

There’s no question that in the current market environment, while most companies are struggling and facing significant headwinds, Canadian energy stocks are some of the best to buy.

After two years of the pandemic, there were already favourable tailwinds for energy stocks. But now, after the sanctions placed on Russia as a result of the war in Ukraine, energy stocks are some of the biggest beneficiaries.

Most investors, when they think of energy stocks, will think of a producer such as a company like Suncor.

And while producers will be some of the biggest gainers as oil prices rise, they’re also some of the most volatile and highest-risk stocks. These stocks and their performances are tied much more to the price of oil.

So, today, that may be positive, but it’s not always helpful. This is why investors may want to look at owning other types of energy stocks as well.

Therefore, if you’re looking for some of the best Canadian energy stocks to buy now, here are two that offer exposure but without the volatility of a producer.

One of the best Canadian energy stocks to buy and hold for the long haul

One of the first energy stocks to look at buying anytime you want exposure to energy, but especially in this environment, is Parkland (TSX:PKI). Parkland is one of the best energy stocks to buy now for several reasons.

First, its exposure to rising energy prices and recovering demand offers a tonne of potential. In addition, the stock is also undervalued. Furthermore, Parkland has well-diversified operations that are also significantly defensive.

In addition to its fuel refining and marketing, Parkland also owns tonnes of convenience stores, which typically have robust sales. So, not only can it benefit from rising energy prices, but Parkland is also one of the top stocks to count on while consumers face higher inflation.

At roughly $36 share, Parkland offers an attractive dividend yield of 3.6%. In addition, the stock trades at a forward enterprise value-to-EBITDA ratio of 7.7 times — well below its five-year average of 9.1 times.

If you’re looking for Canadian energy stocks to buy today, Parkland is certainly one of the best there is.

A well-diversified energy and utility stock

Another high-quality stock that offers investors exposure to energy, but is also a safer business that you can have confidence buying in this environment, is AltaGas (TSX:ALA). AltaGas is one of the best energy stocks to buy because it has incredibly safe utility assets coupled with a unique midstream business.

In recent years, the stock has done a tonne of work to divest its non-core assets and pay down its debt. Now, with AltaGas in a much stronger financial position, it’s a high-quality stock to own for the long haul.

In the short run, its significant utility operations will be crucial to ensuring that the stock isn’t too volatile, and that much of its cash flow is predictable.

For 2022, AltaGas is expecting to report earnings per share of roughly $1.80 to $1.85. That would give the stock a forward price-to-earnings ratio of roughly 16.5 times today.

Plus, over the longer run, AltaGas’s midstream segment offers a tonne of growth potential, especially exporting liquified natural gas from its Ridley Island Propane Export Terminal in B.C.

So, while the stock trades undervalued and offers a yield of roughly 3.6%, it’s certainly one of the best energy stocks to buy now.

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 Daniel Da Costa has no position in any of the stocks mentioned. The Motley Fool recommends ALTAGAS LTD.

More on Investing

Target. Stand out from the crowd
Investing

2 Canadian Stocks I’m Buying Lots of This Year

I’m looking to snatch up exciting Canadian stocks like VieMed Healthcare Inc. (TSX:VMD) throughout 2023.

Read more »

grow money, wealth build
Dividend Stocks

Got $3,000? 3 TSX Growth Stocks to Buy in January 2023

Top TSX growth stocks that look appealing for 2023.

Read more »

woman data analyze
Dividend Stocks

Need Passive Income? Turn $15,000 Into $851 Annually

This passive-income stock is already climbing higher, up 16% in the last three months! Yet it's still valuable, so you…

Read more »

Senior Man Sitting On Sofa At Home With Pet Labrador Dog
Dividend Stocks

Retirees: 3 Reliable Canadian Dividend Stocks to Buy Now for Passive Income

Top TSX dividend stocks now appear oversold.

Read more »

A red umbrella stands higher than a crowd of black umbrellas.
Investing

2 TSX Stocks Safer for Investing in a Recession

These consumer companies will likely beat the broader market averages amid a recession. These stocks offer stability, income, and consistent…

Read more »

Dividend Stocks

For $100 in Passive Income Each Month, Buy 1,500 Shares of This REIT

REITs such as Northwest Healthcare can enable investors create a passive-income stream as well as benefit from capital gains.

Read more »

A colourful firework display
Dividend Stocks

2 Canadian Growth Stocks (With Dividends) to Start 2023 With a Bang

Here are two of the best dividend-paying Canadian growth stocks you can invest in at the start of 2023 and…

Read more »

sale discount best price
Dividend Stocks

4 Insanely Cheap Canadian Stocks to Buy for Passive Income

The recent bear market has created some incredible bargains, especially for those looking for passive income. Here are four cheap…

Read more »