What’s Next for Cenovus Stock in March 2023?

Following recent positive developments for the energy sector giant, Cenovus stock might be well-positioned to buy right now.

| More on:

Image source: Getty Images

Up by over 126% in the last five years, Cenovus Energy Inc. (TSX:CVE) is a force to be reckoned with in the Canadian energy industry. Many may even consider Cenovus as Canada’s top integrated oil and gas company right now.

If you want to invest in the Canadian energy sector, Cenovus stock has several things going for it that might make it an attractive investment to consider for your self-directed portfolio.

Today, we will look at what is happening with the stock to help you make a more well-informed decision.

A drastic change

Cenovus Energy’s CEO, Alex Pourbais, announced his retirement in February. The development might have rightfully sparked some concern, considering he is responsible for getting the company where it is today. At a time when everybody turned their backs on the energy industry, he championed Cenovus and continued going against the tide to place his faith in it.

Cenovus acquired Husky Energy due to his conviction, allowing the integrated energy giant to secure a bargain with the acquisition. Timed to perfection, the acquisition came when low investor sentiment and low commodity prices caused the energy sector to decline.

An excellent year in 2022

The oil and gas sector flourished in 2022 as the world moved into the post-pandemic era. The surge in demand for oil and gas products allowed Cenovus stock to increase its earnings tenfold and adjusted funds flow by 53%. Cenovus also justified the move through the flexibility and cost efficiencies resulting from its acquisition of Husky Energy, .

The strong performance allowed Cenovus Energy to reduce its debt load significantly. Acquiring the company also increased its dividend payouts threefold, contributing to investor value and making it a more favourable investment for many Canadians. Further, Husky Energy reduced the company’s debt by $5.3 billion, making a substantial improvement to its financials.

Foolish takeaway

Cenovus Energy investors have a lot to look forward. Reduced debt levels mean the company’s perceived risk level is significantly lower. With a substantial return of capital to its shareholders, demand for Cenovus Energy stock could increase in the coming weeks. Additionally, Cenovus energy continues to fuel its downstream assets as part of its new integrated structure.

The refineries coming into the fold as a result of its acquisition of Husky Energy play a critical role in this positive development for Cenovus Energy. The company already has incredibly efficient upstream assets in its portfolio. Cenovus plans to increase the operational efficiency of its acquired refineries to bring them to the same level as its upstream assets.

Owing to its integrated infrastructure, Cenovus Energy stock now has the ability to generate generous cash flows in all commodity cycles. Since it is not facing any legal issues like Suncor Energy, Canadian investors may place Cenovus Energy stock in a more favourable position when considering whether to invest in energy stocks.

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 Adam Othman 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

grow dividends
Energy Stocks

TSX Energy Index Down 6.6%: How to Take Advantage of the Sell-Off

Investors can focus on generating passive income from three high-yield energy stocks while waiting for oil demand and prices to…

Read more »

Man data analyze
Dividend Stocks

Got $5,000? Buy These 2 Stocks and Hold Until Retirement

If you have $5,000 to invest, here are two TSX stocks you can buy and hold as part of your…

Read more »

Oil pumps against sunset
Energy Stocks

Better Buy: Suncor Stock or Enbridge?

Energy stocks are under pressure. Is Suncor or Enbridge now oversold?

Read more »

Increasing yield
Energy Stocks

Buy the Dip: 1 Blue-Chip Energy Stock With a Rising Dividend Yield

Suncor Energy (TSX:SU) stock is approaching deep-value territory, making it a top pick for Canadian value and income investors.

Read more »

oil and natural gas
Energy Stocks

Could Cenovus Energy Stock Hit $30 This Year?

Should you buy Cenovus Energy stock now?

Read more »

Oil pipes in an oil field
Energy Stocks

3 High-Yield Energy Stocks to Earn Passive Income for Years

High-dividend-paying TSX stocks such as Enbridge and two others offer investors the opportunity to generate passive income in 2023.

Read more »

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 »