Since 2019, the TSX has come out with the annual rankings of the 30 top-performing stocks. The so-called TSX30 List also guides investors wishing to invest in Canada’s best of the best. More than half of this year’s list belongs to the energy sector.
Athabasca Oil (TSX: ATH) is the highest-ranking energy constituent at number three. The mid-cap stock is attractive for two reasons: price-friendly and high-growth potential. However, TC Energy (TSX: TRP) could be a better buy now. The large-cap stock is more expensive but is a dividend powerhouse.
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High-growth stock
Athabasca Oil’s investment pitch on its website states that its primary objective is to maximize cash flow per share growth by investing in high-margin projects. This $2.8 billion liquids-weighted intermediate producer generates revenue from two core divisions: Thermal Oil (Athabasca region) and Light Oil (Duvernay). The top-tier assets and large resource base have significant long reserve life.
If you invest today, the share price is only $5.14, and current investors enjoy a 23.3% year-to-date gain. Furthermore, the TSX30 winner has an overall return of 354.9% in three years. The 12-month high price target of market analysts recommending a buy rating is $7.50 (+45.9%).
The impressive financial results of Q2 2024 reflect in the stock’s performance. In the three months ending June 30, 2024, total revenue and net income rose 29.7% and 40.5% to $401.7 million and $96 million compared to Q2 2023. Notably, Athabasca had record cash flows during the quarter, evidenced by the $166 million adjusted funds flow and $135 million cash flow from operating activities.
According to management, the record cash flows will fund Athabasca’s capital and operating activities in 2024. Its crown jewel, Leismer in Alberta, is undergoing expansion in the next three years. Once sanctioned, the cornerstone asset can maintain 40,000 barrels per day production for approximately 50 years.
Strategic spin-off
TC Energy is now a pure-play natural gas and energy solutions company following the successful spin-off of its liquids pipeline business on October 1, 2024. Management believes the shift in focus of the $49.3 billion company to natural gas, natural gas storage, and power and energy solutions offer unique opportunities. Moreover, the diversified business is low-risk.
The investment takeaway for TRP is its generous dividend yield. Prospective investors can partake in the lucrative 6% dividend yield. As of this writing, the energy stock outperforms at 46.2%-plus year-to-date and trades at $65.52 per share. Also, the company hasn’t missed a quarterly dividend payment since 2000. The dividend growth guidance is 3% to 5%.
François Poirier, President and CEO of TC Energy, sees natural gas demand reaching record highs, and the next wave of liquids natural gas (LNG) growth will feed exports from Canada, the U.S. and Mexico by 2025. Given the extensive natural gas infrastructure and power generation investments, TC Energy expects to play a vital role in North America’s energy future.
Complete package
Athabasca is an excellent choice for growth investors and frugal investors. However, the large-cap, dividend powerhouse TC Energy is the complete package today. Besides the price appreciation, your investment transforms into quarterly passive income.
