TC Energy Stock: Buy, Sell, or Hold?

TRP stock is a strong option and has been for years, but can investors still claim this when buying today?

| More on:
Gas pipelines

Image source: Getty Images

TC Energy (TSX:TRP) has had quite the rollercoaster ride on the TSX over the last few years! Initially, the company faced some bumps due to delays and cost overruns on major projects. However, as it navigated these challenges and focused on strengthening its pipeline and utility operations, things started looking up. Overall, TC Energy has shown resilience, adapting to market demands and aiming to provide stable dividends. But is it still a buy?

The background

TC Energy is a Canadian powerhouse in the energy sector, primarily known for its extensive network of pipelines that transport oil and gas across North America. With a history dating back to 1951, this company has been on quite the journey, evolving from a regional pipeline operator to a key player in the North American energy landscape. It operates some of the most significant pipelines, including the iconic Keystone pipeline. Beyond just pipelines, TC Energy is also making strides in the renewable energy sector, thus investing in solar and wind projects to diversify its portfolio and contribute to a more sustainable future.

What makes TC Energy particularly interesting is its commitment to not just energy delivery but also safety and environmental stewardship. The company prioritizes the integrity of its pipelines and infrastructure, thus ensuring that they operate safely while minimizing their environmental impact. This dedication has earned them a reputation as a responsible energy provider. Plus, TC Energy is all about stability, often providing reliable dividends to its shareholders. This makes it an appealing option for investors looking for a mix of growth and income.

Recent moves

TC Energy has been busy making headlines recently, especially with its spinoff of the Liquids Pipelines business into a new entity called South Bow Corporation. On August 28, 2024, South Bow closed a massive notes offering worth approximately $7.9 billion. This is a significant step toward establishing its independent capital structure. The move was met with strong market interest and is one of the final milestones leading to the spinoff, set to close early in the fourth quarter of 2024. With South Bow poised to operate 4,900 kilometres of crude oil pipeline infrastructure, it aims to connect Alberta’s crude oil supplies directly to U.S. refining markets — essentially making it a key player in the energy transport sector.

In addition to the spinoff, TC Energy also completed the sale of the Portland Natural Gas Transmission System for around $1.14 billion. A deal that showcases its strategy to enhance balance sheet strength and streamline operations. This transaction is part of a broader initiative to reach a $3 billion asset divestiture target in 2024. TC Energy continues to focus on reducing its debt-to-earnings before interest, taxes, depreciation, and amortization (EBITDA) ratio — all while maintaining its commitment to safe and reliable energy transport, these recent developments highlight the company’s adaptability and strategic foresight.

Still valuable?

Recent earnings and valuations for TC Energy reveal a company that’s not just holding its ground. It’s actively moving forward with impressive growth strategies. In the second quarter of 2024, TC Energy reported a comparable EBITDA of $2.7 billion, reflecting a healthy year-over-year increase. And net income attributable to common shares skyrocketed to $1.0 billion, a significant jump from the previous year. This surge highlights the company’s effective management and the successful implementation of strategic initiatives, including the spinoff of its Liquids Pipelines business into South Bow Corporation. With a forward price-to-earnings (P/E) ratio of 14.37, the stock appears reasonably valued for its growth potential.

Plus, TC Energy’s commitment to enhancing its asset portfolio through significant divestitures and strategic partnerships shows its dedication to maximizing shareholder value. The company is on track to achieve its $3 billion asset divestiture target. This will strengthen its balance sheet and improve its debt-to-EBITDA ratio, which is expected to hit 4.75 times by year-end. With plans to invest in new projects and improve operational efficiency, TC Energy seems well-positioned to meet the growing energy demands in North America while pursuing sustainability initiatives. As it navigates the transition into separate entities with distinct strategies, investors can look forward to a bright future. TC Energy has ample opportunities for growth and profitability on the horizon!

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 Amy Legate-Wolfe 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

question marks written reminders tickets
Dividend Stocks

Suncor vs. Manulife: Which TSX Stock Is a Better Buy?

An oil bellwether and insurance icon are ideal anchor stocks in an investment portfolio.

Read more »

Oil pumps against sunset
Energy Stocks

For a Chance at $3,000 in Passive Income, Buy 782 Shares of This Energy Stock

TC Energy is a high-dividend TSX stock that is positioned to increase its dividend payout at a steady pace in…

Read more »

oil and gas pipeline
Energy Stocks

3 Reasons to Buy Enbridge Stock Today

Investors must pay attention and know the three reasons why Enbridge is a strong buy today.

Read more »

Man with no money. Businessman holding empty wallet
Energy Stocks

This 6.6% Dividend Stock is My Pick for Instant Income

With a 6.6% dividend yield and operations that provide reliable and steady income, this top Canadian stock is one of…

Read more »

Oil industry worker works in oilfield
Energy Stocks

1 Top Canadian Dividend Stock I’d Choose Over GICs Any Day

A top Canadian dividend stock offers more financial gains than GICs but with a slightly higher risk.

Read more »

Utility, wind power
Energy Stocks

Why Shares of This Renewable Stock Are Powering Higher

This renewable energy stock could be the future of investing, with plenty of cash on hand and a secure future…

Read more »

gas station, car, and 24-hour store
Energy Stocks

2 Incredibly Cheap Canadian Energy Stocks to Buy Now

Given their discounted stock prices and healthy growth prospects, these two energy companies could deliver superior returns over the next…

Read more »

Gold king in chess game face with the another silver team on black background (Concept for company strategy, business victory or decision)
Energy Stocks

Gold Stocks vs Oil Stocks: Where Canadians Should Invest for the Rest of 2024

Gold's momentum looks strong for the rest of 2024, especially with economic uncertainties. But don't write off oil stocks yet…

Read more »