The 3 Best Growth Stocks of 2022

Cenovus stock (TSX:CVE)(NYSE:CVE) and these two other energy stocks have been the biggest growth stocks of 2022 so far.

| More on:
Burning gas and electric cooker rings

Image source: Getty Images

This year has been filled with a lot of anxiety for investors. And it’s on top of a few years of market uncertainty, with analysts predicting a drop in the market at any moment. Well, we had that drop, due to inflation and interest rates rising again and again. And it’s caused many to move away from the growth stocks we saw rise in the past.

But instead of moving away, it’s now time to look forward to more growth in the future. And there have already been some great ones in 2022, ones that should continue climbing. With inflation coming down to 7.6% year over year in July, now is the time to look forward. And I would start with these three growth stocks.

Tourmaline

Leading the top spot in growth stocks this year is Tourmaline Oil (TSX:TOU). The shares of Canada’s largest natural gas producer are up a whopping 102% on the TSX year to date. But here’s the really great part. Tourmaline stock still trades at a valuable 10.4 times earnings!

Plus, investors can latch on to a 1.19% dividend yield. Not high, true, except that you’re here for growth stocks. And in that sense, Tourmaline stock doesn’t get much better. But the question is whether it can continue this growth.

In short, yes and no. Yes in the sense that analysts believe there is still strong growth ahead for growth stocks like this one. Will it double again, though? Probably not. Still, analysts love the company’s acceleration of growth and business plan to create capital returns. Tourmaline stock now has an average target price of $93, representing a potential upside of 22%.

Arc Resources

In second place comes Arc Resources (TSX:ARX), with shares up 60% year to date, and yet again trading at a steal at just 8.4 times earnings! This comes even as ARX announced record earnings recently, with the oil and gas producer averaging 336,112 barrels of oil equivalent per day. The company managed to achieve record free funds flow up 67% year over year, and increased its guidance for the year.

Analysts continue to believe this will be one of the growth stocks to continue growing in 2022, though again perhaps not as much as it has so far this year. Even still, ARX stock currently has a consensus price target of $24, representing a potential upside of 33% on the TSX today. Plus, you can add a 2.69% dividend yield to your allocation of growth stocks.

Cenovus

Sensing a theme here? Cenovus (TSX:CVE)(NYSE:CVE) has also been a major winner in 2022, with shares up 47% year to date. Yet again it trades at 11.3 times earnings, putting it in value territory among these other growth stocks.

Cenovus stock I think I like the most among all three of these growth stocks. That’s because Cenovus stock took measures to stoke growth before the pandemic while it had the cash, and bought up Husky Energy. It’s now the third largest oil and gas producer in the country, creating $1 billion in synergies. Management recently announced it will be acquiring the remaining 50% interest in its Toledo refinery, along with strong earnings that saw debt reduced by about $2 billion year over year.

Given its more diverse and larger position in the oil and gas sector, I’d look more to Cenovus stock for future growth in 2022 and beyond. It’s one of the growth stocks building up steam, whereas the others may run out of it.

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 Amy Legate-Wolfe 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

A worker overlooks an oil refinery plant.
Energy Stocks

2 Top TSX Energy Stocks to Buy in October

Oil stocks now look cheap to buy for TFSA and RRSP portfolios.

Read more »

TSX Today
Energy Stocks

TSX Today: What to Watch for in Stocks on Tuesday, October 4

The ongoing recovery in commodity prices could help the main TSX benchmark trade on a positive note today.

Read more »

Man holding magnifying glass over a document
Energy Stocks

Should You Invest in Canadian Energy Stocks Right Now?

Canadian energy stocks are insanely cheap, but are they a good investment right now?

Read more »

Canadian energy stocks are rising with oil prices
Energy Stocks

Why Suncor Energy Stock Fell 10% in September

Energy stocks are top gainers on the TSX in 2022, but still cheap. Suncor Energy stock seems ripe for a…

Read more »

Pipeline
Energy Stocks

Why Canadian Natural Resources Fell 10% in September

With healthy growth prospects and dividend growth, Canadian Natural Resources would be an ideal buy at today's attractive valuation for…

Read more »

Oil pumps against sunset
Energy Stocks

Why Imperial Oil (TSX:IMO) Stock Fell 5.5% in September

Imperial Oil Ltd. (TSX:IMO) stock slipped in September in the face of lower oil prices and rising recession risks.

Read more »

A person builds a rock tower on a beach.
Dividend Stocks

Retirement Wealth: 2 Oversold Canadian Stocks to Buy Now and Own for Decades

These industry-leading dividend stocks look cheap right now and have increased their distributions annually for decades.

Read more »

Oil pumps against sunset
Energy Stocks

Should You Buy Canadian Natural Resources (TSX:CNQ) Stock on the Pullback?

CNQ stock looks oversold. Here's why.

Read more »