Most Canadian energy stocks have started the year 2024 on a strong note, as the recent recovery in crude oil prices has boosted investors’ confidence. After sliding to their lowest levels in six months, the West Texas Intermediate crude oil futures prices have recovered by more than 15% amid expectations of improving demand, which is likely to boost the profitability of oil and gas companies.
Given the optimistic demand outlook for energy products, it could be the right time to invest in some high-quality energy stocks that are well-positioned to benefit from the positive industry trends. In this article, I’ll highlight two such energy stocks that I think are worth buying hand over fist in March.
Suncor Energy stock
Suncor Energy (TSX: SU) is the first energy stock you can consider adding to your portfolio in March 2024. Suncor is one of Canada’s largest integrated oil and gas companies. It currently has a market cap of $60.4 billion as SU stock trades at $46.86 per share after advancing by 10.4% year to date. The stock also offers a decent 4.7% annualized dividend yield at this market price and distributes its dividend payouts every quarter. In the fourth quarter of 2023 alone, Suncor returned about $1.1 billion to shareholders through dividends and share repurchases.
While the company’s financial growth trends were hit hard by the COVID-19 pandemic and the collapse in oil prices in 2020, it took several strategic measures to position itself for a strong recovery. Its outstanding financial performance for 2022 and 2023 clearly reflected the outcome of these measures. Notably, despite facing the global pandemic-driven challenges in between, Suncor’s total revenue grew positively by 30% in the five years between 2018 and 2023. More importantly, its adjusted annual earnings jumped 92% during these five years.
As Suncor remains focused on improving operational efficiency and increasing its production levels further, its share prices could continue to soar.
Imperial Oil stock
Another top Canadian energy stock you can add to your portfolio right now is Imperial Oil (TSX: IMO). After rallying by 212% in the previous three years, IMO stock has climbed by more than 17% in 2024 so far to currently trade at $88.35 per share with a market cap of $47.4 billion. At this market price, IMO stock offers a 2.8% annualized dividend yield. Interestingly, the American energy giant ExxonMobil currently holds slightly less than 70% stakes in Imperial Oil.
In the fourth quarter of 2023, Imperial saw the highest adjusted upstream production in over 30 years at 452,000 gross oil-equivalent barrels per day, with Kearl production reaching a record high. Despite lower commodity prices, its adjusted net income for the quarter stood at $1.37 billion, exceeding Street analysts’ expectations of $1.21 billion.
Imperial’s financial growth trends should improve further as the economy recovers and the demand for energy products strengthens in the coming years. Moreover, the company’s strong financial position, robust cash flows, and increased focus on renewable energy make its stock worth buying now to hold for the long term.
