The energy sector has been one of the best-performing sectors on the Toronto Stock Exchange this year, thanks to the recent recovery in crude oil prices and strengthening long-term demand outlook for energy products. Despite the recent gains, however, many fundamentally strong Canadian energy stocks still look attractive, especially based on their future growth prospects.
In this article, I will highlight two such energy stocks that you can buy right now for less than $500 and expect handsome returns in the long run.
Peyto Exploration & Development stock
Peyto Exploration & Development (TSX: PEY) is the first energy stock in Canada that you can buy right now for less than $500. This Calgary-headquartered company mainly focuses on oil and natural gas production in Alberta’s deep basin, where it has a large land base and low-cost operations. It currently has a market cap of $3.1 billion as its stock trades at $15.77 per share after rallying by 31% so far in 2024. Interestingly, PEY stock distributes its dividend payouts on a monthly basis, which could help investors generate consistent extra income every month. At the current market price, it offers an impressive 8.7% annualized dividend yield.
In the first quarter of 2024, Peyto’s revenue rose 36% YoY (year over year) to $345.2 million due mainly to a solid 21% rise in its production volumes, averaging 125,018 barrels of oil equivalent per day. During the quarter, the company generated $204.6 million in funds from operations as its effective hedging and diversification strategy played an important role in shielding it from the sharp decline in natural gas prices.
Moreover, its inventory of high-quality drilling prospects and the ongoing efforts to optimize newly acquired assets brighten Peyto’s long-term growth outlook, which can help it post stronger financial growth and robust cash flows in the coming years. Besides its attractive monthly dividends, these are some of the key reasons why I find Peyto to be a great energy stock to buy now and hold for the long term.
Suncor Energy stock
Suncor Energy (TSX: SU) could be another top energy stock to buy now on the TSX today, as it’s well positioned to benefit from the recovery in oil demand and prices. Suncor has a strong integrated business model with a focus on oil and oil sand production and petroleum refining that provides stability to its earnings and cash flows. It currently has a market cap of $69.7 billion as its stock trades at $54.16 per share after rallying by 27.6% year to date. SU stock also offers a decent 4.1% annualized dividend yield at the current market price and distributes these payouts every quarter.
Earlier this month, Suncor reported a robust performance for the first quarter with several record-breaking achievements. During the March quarter, the company achieved record upstream production of 835,000 barrels per day (bbls/d). This upstream production included its oil sands operations, which reached an all-time high with 785,000 bbls/d as it continued to focus on optimizing assets. This strong operational performance drove Suncor’s quarterly earnings up by 3.7% YoY to $1.41 per share, exceeding Street analysts’ expectations of $1.28 per share.
Besides its impressive financial growth trends even amid difficult macroeconomic times, Suncor’s surging production levels and strong financial position brighten its long-term growth outlook, making it a really attractive Canadian energy stock to buy now and hold for years to come.
