Is Cenovus Stock a Buy in February 2023?

Here’s why I think Cenovus (TSX:CVE) stock is a buy in February for investors with a reasonably long time horizon.

| More on:
energy industry

Image source: Getty Images

Over the past three years, the earnings of companies in the energy sector have increased by 50% annually. These businesses’ revenues have also increased by 19%. Indeed, these incredible results indicate that energy stocks are moving in the right direction. Of course, rising commodities prices have a lot to do with these improved fundamentals.

Various analysts point to an optimistic outlook for Canadian energy equities, despite popular forecasts of a recession in 2023, because they believe that oil demand in China is returning to normal. That thesis certainly makes sense and is one I think could drive energy prices higher in the near term.

Accordingly, for those looking for the best way to play this trend in 2021, Cenovus Energy (TSX:CVE) is certainly a top stock to pay attention to. 

Let’s dive into whether Cenovus stock is a buy right now.

Cenovus made a $100,000 donation to Influence Mentoring

Let’s start with a heart-warming story that has positive financial implications for investors.

Influence Mentoring Society recently announced that Cenovus Energy has donated $100,000 to its cause. Cenovus has supported Indigenous-led initiatives for more than 10 years, and this investment shows how seriously the firm takes promoting reconciliation.

Thanks to financing from Cenovus, more students from throughout the nation will be able to participate in Influence’s free mentoring program. Influence Mentoring is an organization run by Indigenous peoples that helps ambitious Indigenous post-secondary students build relationships with business innovators, leaders, and artists. Cenovus has promised to support Influence by offering staff the chance to take part as mentors as well as making a financial donation.

Cenovus will gain from the expansion of the Trans Mountain Pipeline

The eagerly anticipated Trans Mountain pipeline extension project will start operating later this year, most likely in the fourth quarter. Cenovus stock is likely to benefit from its expansion, being able to ship more of its product to refineries. 

Of course, investing in the communities in which Cenovus operates remains key to the company’s success. Thus far, Cenovus’s management team seems to take to heart the concerns of its constituents and is among the best energy stocks in this regard, in my view. 

More share repurchases coming

Cenovus’s normal course issuer bid (NCIB) to buy up to 136,717,741 common shares over a 12-month period beginning on November 9, 2022, and ending on November 8, 2023, has been renewed. This share-buyback program, which delivers capital to shareholders in a tax-efficient way, has been cheered by investors. 

Of course, the company is also a substantial dividend payer, and is also reducing the debt on its balance sheet. Thus, overall, this is a stock I think long-term investors certainly want to consider here.

Bottom line

Cenovus is certainly a stock I think long-term investors want to consider right now. Yes, commodity prices are likely to be volatile. However, for those looking for exposure to this sector, there are few better plays in the Canadian market right now.

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 no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.

More on Energy Stocks

Dollar symbol and Canadian flag on keyboard
Energy Stocks

2 Undervalued Canadian Stocks to Buy in March 2023

With the market on the cusp of a potential rebound, here are two undervalued stocks that should be on any…

Read more »

Gas pipelines
Energy Stocks

Better Energy Stock to Buy: Suncor or Canadian Natural Resources?

Suncor and Canadian Natural Resources are off their recent highs. Are these stocks now good to buy?

Read more »

Financial technology concept.
Dividend Stocks

2 TSX Value Stocks to Buy for Peace of Mind (and a Crazy-Good Deal)

2 TSX stocks that could outperform in the long term.

Read more »

oil and gas pipeline
Energy Stocks

Why Tourmaline Oil Stock Just Fell to 52-week Lows?

The recent correction in Tourmaline Oil stock could be an opportunity.

Read more »

oil and gas pipeline
Energy Stocks

Oil Stocks Are Starting to Get Interesting Again

Oil stocks like Suncor Energy Inc (TSX:SU) are beginning to get interesting again, with oil prices testing new lows.

Read more »

edit Sale sign, value, discount
Energy Stocks

2 Cheap Canadian Stocks You Can Buy for Less Than $50

You can buy Suncor Energy stock, and this gold stock at cheap valuations today

Read more »

green power renewable energy
Energy Stocks

2 Renewable Energy Stocks That Could Put You in the Green

Canadians looking to invest in renewable energy stocks can consider buying shares of Brookfield Renewable Partners and NextEra Energy.

Read more »

A solar cell panel generates power in a country mountain landscape.
Energy Stocks

Is Algonquin Power & Utilities a Buy After Its Fourth-Quarter Earnings?

Given its improving financials, healthy outlook, and attractive valuation, I am bullish on Algonquin Power & Utilities.

Read more »