Cenovus Energy (TSX:CVE) picked up a new tailwind in the past two months. Investors who missed the bounce are wondering if CVE stock is still undervalued and good to buy for a self-directed Tax-Free Savings Account or Registered Retirement Savings Plan (RRSP) portfolio focused on contrarian picks.
Cenovus share price
Cenovus trades near $19 per share at the time of writing. The stock was as low as $15 two months ago, but is still way off the $28 it fetched last summer.
Weak oil prices are largely to blame for the decline in the stock over the past year. West Texas Intermediate (WTI) oil trades near US$67 per barrel at the time of writing. It is off the 2025 low around US$57, but is still down from the US$80 it reached last year.
The recent rally is probably due to oil traders betting on a tariff deal between the United States and China. Positive news could save China’s struggling economy from plunging into a deeper slump and might help avoid a recession in the U.S., where tariffs are having an impact on sentiment and consumption. The two countries are the largest oil consumers, so the health of these giant economies has a significant impact on the market.
Weakness in the oil market last year arose as investors worried about a prolonged struggling Chinese economy along with rising oil supply from non-OPEC producers, including the United States and Canada. Analysts broadly expect the market to remain oversupplied into 2026. A major geopolitical disruption in the Middle East, however, could quickly change the outlook.
Cenovus earnings
Cenovus reported decent Q1 2025 financial results despite the challenging market conditions. Total upstream production came in at 818,900 barrels of oil equivalent (BOE/d) compared to 800,900 in the same period last year. Cenovus produces oil, natural gas liquids, and natural gas. It has oil sands, conventional oil, and offshore oil assets, along with extensive natural gas properties.
The company also owns refining operations that turn crude oil into gasoline, jet fuel, diesel fuel, and other retail products. Total throughput in these downstream operations rose to 665,400 barrels per day (bbls/d) compared to 655,200 in Q1 2024.
Net earnings, however, slipped from $1.2 billion in Q1 2024 to $859 million, largely due to weak oil prices. Management still has an upbeat outlook and the board just raised the annualized dividend by 11% to $0.80.
Cenovus has a number of growth projects on the go that will boost production in the next few years, with WTI oil at US$45 or higher as the benchmark for the new assets to be profitable.
Narrows Lake is expected to deliver first oil in Q3 2025. Sunrise is also making good progress. The Foster Creek optimization project is 75% complete and is on track to go into operation in 2026. In the offshore segment, the West White Rose project is scheduled for installation and commissioning later this year. This major project is now 90% complete and is expected to begin production in Q2 2026.
Investors who buy CVE stock at the current price can get a dividend yield of 4.2%.
Time to buy?
Near-term volatility should be expected in the energy market. In fact, it wouldn’t be a surprise to see WTI slip back to the US$60 mark before the end of the year, given the current supply outlook.
That being said, CVE already trades at a reasonable level, and production should rise in the next couple of years. You get paid a decent dividend yield to ride out the turbulence. A supply shock or positive news on trade deals could trigger a move above US$70 for WTI, which would likely give the share price a nice boost.
