Sitting on Cash? These 2 TSX Stocks Are Great Buys Today But Won’t Be Forever

Here’s why Algonquin Power (TSX:AQN) and Suncor Energy (TSX:SU) are two top TSX stocks to consider buying right now.

| More on:
money cash dividends

Image source: Getty Images

The Russia-Ukraine War has gravely affected the global energy sector, as both of these countries are important sources of oil and energy. Accordingly, finding top TSX stocks in the energy sector can be a way for investors to put some cash to work for near- to medium-term returns.

This energy bull market may be in its later innings, considering how inflation is expected to come down in the coming months. Central banks around the world continue to hike interest rates. This should hurt demand for energy, if a self-inflicted global recession does take hold.

So, why invest in energy stocks? Well, some top TSX names in this sector certainly provide excellent long-term exposure to a sector that has actually seen pretty meaningful (if not volatile) growth over time.

Let’s dive in.

Top TSX stocks to buy: Algonquin Power 

Algonquin Power & Utilities (TSX:AQN) is one of the most actively traded stocks in the Toronto Stock Exchange in the utilities category. However, this stock has utterly disappointed its shareholders and investors with a dip of over 30% in the previous month.

Algonquin is known to be a less-volatile and a slow-paced stock compared to other companies in the same category. Additionally, this company’s dividend yield is what attracts many investors. However, given the company’s recent massive decline, AQN stock now yields an impressive 9.9%, putting this stock in the category of companies many think may have to slash its dividend.

The company’s recent earnings report provided little for investors to get excited about. Citing various macro headwinds, the company reduced its forward guidance. Accordingly, investors saw fit to move to other areas of the utilities/energy market.

That said, as a long-term holding, AQN stock is now very attractive at these levels. After this sharp selloff, this is a stock I think could be well positioned for a nice rally next year, as investors seek more defensive exposure.

Suncor Energy 

In recent news, Suncor Energy (TSX:SU) has been removed from the list of RBC Capital Markets’ global energy best ideas as this Canada-based energy company is facing internal challenges. Much like Algonquin, Suncor’s performance over the past month has been less than stellar.

That said, as with Algonquin, I think Suncor is a top TSX stock worth considering on this dip. That’s because the company’s position as the largest energy producer in Canada should be viewed as a positive, given concerns around energy security globally. Despite weaker oil prices of late, I think 2023 could set up to be a less-volatile year, which should boost the company’s fundamentals.

Much of the weakness around Suncor of late is tied to expert predictions that improvements in the company’s Fort Hills mine in northern Alberta may be difficult and expensive. While higher costs may lower productivity in the near term, I think over the long term, these investments will pay off.

Thus, Suncor is a company that’s divisive, with investors’ views largely shaped by their time horizon. For short-term investors, perhaps there’s not a lot to like about this company right now. However, longer-term investors may want to consider the company’s discount as a reason to buy. I’m in the latter group.

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 Chris MacDonald has positions in Algonquin Power & Utilities. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.

More on Energy Stocks

Investor reading the newspaper
Energy Stocks

Top Canadian Stocks to Buy Right Now With $2,500

Investing in undervalued Canadian stocks such as Propel should help you derive outsized gains in 2025 and beyond.

Read more »

The sun sets behind a power source
Energy Stocks

Northland Power: Buy, Sell, or Hold in 2025?

With three major projects coming on stream in the next couple of years, 2025 should be a good year for…

Read more »

A worker overlooks an oil refinery plant.
Energy Stocks

What to Know About Canadian Energy Stocks for 2025

Today, I'll explore tariffs, pipelines, and profit potential on TSX energy stocks for 2025, and how Suncor stock and two…

Read more »

Utility, wind power
Top TSX Stocks

3 Reasons to Buy Enbridge Stock Like There’s No Tomorrow

There are plenty of reasons to buy Enbridge (TSX:ENB) for both growth and income investors to consider. Here's a look…

Read more »

how to save money
Energy Stocks

Best Stock to Buy Right Now: Canadian Natural Resources vs Imperial Oil?

Two Canadian oil majors should hold up well against US tariffs on energy imports, but one is a screaming buy.

Read more »

Concept of multiple streams of income
Energy Stocks

This is the Best Energy Stock to Invest $200 in Right Now

This energy stock offers a massive dividend yield, a growing business, and stable income. So why wait?

Read more »

oil pump jack under night sky
Energy Stocks

Should You Buy CNQ Stock While it’s Below $45?

Investors who are positive on oil and natural gas demand are wondering if CNQ stock is good to buy for…

Read more »

Pumpjack in Alberta Canada
Energy Stocks

Buy, Sell, or Hold Suncor Stock?

A strong and healthy risk tolerance is required to keep holding a sinking stock, even if the slump is temporary.…

Read more »