This year has been challenging for investors due to the volatility created by the geopolitical tensions, inflationary environment, and rising interest rates. However, higher prices have befitted commodity-related stocks, thus driving their stock prices. Despite the surge, the following three Canadian stocks are trading at attractive valuations, providing excellent buying opportunities.
Suncor Energy
With the imposition of sanctions on Russian oil by the United States, Canada, the U.K., and the European Union, oil prices have increased and are trading close to US$120/barrel. Higher prices have benefited oil-producing companies, such as Suncor Energy (TSX: SU)(NYSE: SU), which is trading around 66% higher this year. Despite the massive rise, the company’s NTM price-to-earnings multiple stands at an attractive 6.3.
Meanwhile, the International Energy Agency chief, Fatih Birol, has warned that oil prices could rise further amid rising demand and supply chain concerns. Suncor Energy’s management expects its production to increase by 5% this year. Further, its cost-cutting initiatives and lower interest expenses amid a decline in debt levels could boost its financials in the coming quarters. It also pays a quarterly dividend of $0.47/share, with its forward yield at 3.65%. So, given its impressive outlook, attractive valuation, and healthy dividend yield, I believe Suncor Energy would be an excellent buy.
Nutrien
Amid the recent pullback, Nutrien (TSX: NTR)(NYSE: NTR) has lost around 20% of its stock value compared to its 52-week highs. Despite the correction, the company still trades 24.4% higher this year. Its valuation also looks attractive, with its NTM price-to-earnings multiple standing at 5.3. Amid the ongoing war and the subsequent sanctions on Belarus, potash prices remain elevated.
Amid the concerns over the supply of potash from Eastern Europe, Nutrien has strengthened its production capabilities to increase its production by one million tonnes, with a substantial part of increased volumes could come in the second half of this year. The company could also benefit from rising prices of nitrogen products amid the decline in product availability from Russia and China. Notably, the falling debt levels and share repurchases could also boost Nutrien’s financials and stock price in the coming quarters. Considering all these factors, I am bullish on Nutrien.
Teck Resources
My final pick is Teck Resources (TSX: TECK.B)(NYSE: TECK), which is involved in producing copper, zinc, and steel-making coal. It operates several mines in Canada, the United States, Chile, and Peru. Supported by higher commodity prices and its impressive financials, the company is trading around 53% higher for this year. Despite the remarkable returns, the company still trades at an attractive NTM price-to-earnings of 5.7.
Analysts expect copper and zinc prices to remain elevated in the near to medium term amid the ongoing Russia-Ukraine war, falling global inventories, and growing demand. Teck Resources is continuing the construction of its Quebrada Blanca phase two, with a line one facility expected to commence production from the fourth quarter of 2022. This year, the company’s management also projects to increase its zinc and steel-making coal production.
Higher realization prices and increased production could boost its financials in the coming quarters. Considering its growth potential, I believe Teck Resources is an excellent buy at these levels.
