The energy sector has outperformed most other sectors on the TSX so far this year, as rising crude oil prices are expected to boost the profitability and growth outlook of many energy companies. Despite the recent rally, however, some energy stocks still offer attractive value and growth potential, especially as the global demand for energy products is likely to continue soaring in the years to come as global economic growth gradually gets back on track.
Here are two rallying TSX energy stocks that you may want to buy hand over fist right now before they soar even higher.
MEG Energy stock
The first top energy stock listed on the Toronto Stock Exchange that you can consider adding to your portfolio right now is MEG Energy (TSX: MEG). If you don’t know it already, it’s a Calgary-headquartered Canadian focused on environmentally friendly oil extraction in Alberta, using advanced methods to reduce carbon emissions and boost oil recovery. The company currently has a market cap of $8.3 billion as its stock trades at $30.63 per share with around 29% year-to-date gains.
Shares of MEG Energy have yielded outstanding 460% positive returns in the last five years due mainly to its consistently improving financial growth trends, attracting investors’ attention. In the last five years, the energy firm’s total revenue more than doubled from $2.7 billion in 2018 to $5.7 billion in 2023. More importantly, its adjusted annual earnings during the same five years have improved significantly.
Last year, MEG’s annual production increased by around 6% YoY (year over year) to over 100,000 barrels per day. This development helped the company generate a solid free cash flow of slightly less than $1 billion, which it plans to use for debt repayment and share buybacks. Moreover, the company’s focus on cost-efficient ways to achieve even higher bitumen production levels in the future makes its long-term growth outlook bright, which could help its share prices continue outperforming most other Canadian oil and gas stocks.
Athabasca Oil stock
Athabasca Oil (TSX: ATH) is another attractive energy stock you may want to buy right now and hold for the long term. This company, with a market cap of $2.9 billion, primarily focuses on the development of thermal and light oil assets. In 2024 so far, ATH stock has risen 24.5% to currently trade at $5.19 per share, extending its three-year rally to an eye-popping 980%.
In 2023, Athabasca’s average production of 34,490 barrels of oil equivalent per day fell slightly on a YoY basis but still met its guidance. As a result, the company generated $306 million in cash flow from operating activities and a free cash flow of $155 million. Interestingly, Athabasca plans to return 100% of this free cash flow to shareholders through share buybacks in the ongoing year.
Besides its commitment to capital return strategies, 1.2 billion barrels of proved plus probable reserves and significant development projects underway strengthen Athabasca’s growth outlook. These are some of the key reasons that could keep the ongoing positive momentum in this TSX energy stock intact in the coming years.
