Canadian energy stocks were on fire in the first half of 2022. Oil and gas prices soared on the back of improved demand in the aftermath of the COVID-19 pandemic. Moreover, Russia’s invasion of Ukraine stirred global concerns over oil and gas supply. That momentum petered out in the second half of the year.
Today, I want to zero in on two energy stocks that are looking to diversify in order to bolster their long-term prospects. This could help companies avoid overexposure to price volatility in the oil and gas space. In this article I will focus on the electric vehicle (EV) market.
Why should investors seek exposure to the EV market?
The EV market has reached a new phase in this decade. A flurry of top automobile manufacturers moved to unveil an EV alternative in response to a global push for renewables and consumer demand.
Beyond Market Insights recently estimated that the global EV market was worth approximately US$178 billion in 2021. The market researcher projects that this market will reach a valuation of US$1.10 trillion in 2028. That would represent a compound annual growth rate (CAGR) of 22% between 2022 through to 2030.
Market researcher Fortune Business Insights estimated that the global EV market was worth much more at US$246 billion in 2020. It forecasts that this market will rise from US$287 billion in 2021 to US$1.31 billion by 2028. This would represent a CAGR of 24%.
How this top oil and gas producer is moving into the EV space
Imperial Oil (TSX: IMO) is the first energy stock I’d target today. This Calgary-based company is engaged in the exploration, production, and sales of crude oil and natural gas in Canada. Shares of this energy stock have surged 51% in 2022 as of close on December 7.
In October 2022, Imperial Oil announced that it had begun a collaboration with FLO. This Quebec-based company that manufactures EV charging stations for property managers, business owners, and employers. The agreement will see the two companies develop a charging service option at Imperial’s Esso and Mobil-branded wholesalers.
This energy stock currently possesses a very favourable price-to-earnings (P/E) ratio of 7.3. Imperial Oil offers a quarterly dividend of $0.44 per share. That represents a 2.4% yield.
This energy stock can be trusted for the long haul, as it commits to renewables
Enbridge (TSX: ENB) is the second energy stock that Canadians should look to snatch up in the first half of December. The Calgary-based energy infrastructure company is the largest in North America. Its shares have increased 8.2% in the year-to-date period.
This energy infrastructure giant has also sought exposure to the EV space. Last decade, Enbridge partnered with Hunt Electric, Minnesota Power, and other municipalities to develop solar-powered electric vehicle charging stations for public use in the region. The facility is expected to have a 25-year lifespan.
Shares of this energy stock last had an attractive P/E ratio of 19. Enbridge offers a quarterly distribution of $0.887 per share, which represents a tasty 6.6% yield.
