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Premium content from Motley Fool Stock Advisor Canada
The market’s attention right now is seemingly focused purely on buzzwords like “AI,” “the Magnificent Seven” and “crypto.”
To us, this means opportunity — but not where the masses are playing. It’s where they aren’t.
Once again, we find that a relative few are paying attention to the energy sector.
This means we think that you should be paying attention to the energy sector. Namely, this stock.
Foolishly yours,
Iain Butler, CFA
Advisor, Stock Advisor Canada
“Best Buys Now” Pick #1:
Parex Resources (TSX: PXT)
Parex Resources (TSX: PXT) explores for, develops, and produces onshore oil and natural gas in Colombia.
Why do I like it now?
In addition to Parex’s strong-as-usual results that were reported at the end of February, the company’s operations were hindered earlier this year by social protests that have now ended. The temporary shut-in will have an impact on Parex’s Q1’24 report, but in the grand scheme of things, will be easily forgotten. Meanwhile, the stock price has arguably lost about 20% of its value because of a situation that is no more.
Parex currently offers a cash-flow-supported dividend yield of 7.2% (remember, the higher the yield, the riskier the market thinks the stock is), and the far-too-low 3 times earnings multiple that it currently trades for suggests that a rather dire future awaits. But neither of these metrics are representative of the company’s performance. We think they’re far more a product of the market’s ignorance.
Said more succinctly, Parex shares are very attractive … right now.
