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

Coworkers standing near a wall
Energy Stocks

3 Things About Enbridge Stock Every Smart Investor Knows

Enbridge stock (TSX:ENB) continues to be one of the best dividend stocks out there, but with a payout ratio of…

Read more »

Red siren flashing
Energy Stocks

Buy Alert: 4 Reasons Why TC Energy Stock Is a Must-Own Now

A large-cap energy stock is a strong buy today for four compelling reasons.

Read more »

Oil pipes in an oil field
Energy Stocks

Here’s Why Enbridge Stock Looks Like a Great Buy

Consider looking at Enbridge (TSX:ENB) if you seek high-yielding but safe dividends for your self-directed portfolio.

Read more »

oil and natural gas
Energy Stocks

3 Energy Stocks Already Worth Your While

TSX energy stocks could shine for much longer. Here's why Canadian Natural Resources (TSX:CNQ), Parex Resources (TSX:PXT), and another oil…

Read more »

Utility, wind power
Energy Stocks

Brookfield Renewable Partners Stock: Buy, Sell, or Hold?

BEP stock (TSX:BEP.UN) now trades at half its share price back in 2021. So what should investors do with this…

Read more »

Energy Stocks

2 No-Brainer Energy Stocks to Buy With $5000 Right Now

Cenovus Energy is one of two high quality energy stocks that are undervalued and well-positioned for long-term success.

Read more »

Gas pipelines
Energy Stocks

Here’s Why Enbridge Is a No-Brainer Dividend Stock

Enbridge stock has resilient operations, significant competitive advantages and a safe payout ratio, making it a top dividend stock.

Read more »

Solar panels and windmills
Energy Stocks

Buy 849 Shares of This Super Dividend Stock for $3,100/Year in Passive Income

Looking for a super dividend stock to buy now? Here's a discounted top pick that can provide an ample income…

Read more »