Canadian Natural Resources (TSX: CNQ) picked up a nice tailwind over the past two months, but the stock is still down about 18% from its 2024 high.
Investors who missed the recent bounce off the 12-month low are wondering if CNQ stock is still undervalued and good to buy for a self-directed Tax-Free Savings Account (TFSA) and Registered Retirement Savings Plan (RRSP) portfolio focused on dividends and long-term total returns.
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Canadian Natural Resources share price
CNRL trades near $45 per share at the time of writing. The stock dipped as low as $35 two months ago during the market rout caused by the announcement of widespread U.S. tariffs. CNRL traded as high as $55 in April 2024, but has been on a downward trend since that time.
Falling oil prices are the main reason the stock pulled back over the past year. Weak demand in China and rising production from non-OPEC members, including Canada and the United States, combined to put pressure on oil markets through the second half of 2024.
The continued weakness so far in 2025 is attributed to uncertainty around how the U.S. tariffs will ultimately impact the American and global economies. Additional economic pain in China and a recession in the United States would likely put additional pressure on oil demand and lead to lower prices. The two countries are the largest users of oil in the world.
Upside
Hopes for a near-term trade deal between the United States and China have provided some support to oil markets in recent weeks. A finalized agreement could provide a big boost.
Geopolitics is also playing a role in the energy market in the past few days. West Texas Intermediate (WTI) oil trades near US$73 per barrel at the time of writing. It is up from US$60 at the end of May, driven higher by concerns that there could be a major supply disruption in the Middle East after Israel’s latest air strikes on Iran. Prices could soar much higher if Iran closes the Strait of Hormuz, where roughly 20% of global oil supply has to pass to get to international markets
Risks
Energy analysts widely expect the oil market to be oversupplied into 2026, based on anticipated production and consumption levels. If the geopolitical premium evaporates, WTI oil could quickly retest the US$60 point, so investors should brace for some near-term volatility.
CNRL earnings report
CNRL continues to focus on growing production and allocating capital to the best opportunities across its asset portfolio. The company has oil sands, conventional heavy oil, conventional light oil, offshore oil, and natural gas production.
CNRL achieved record quarterly oil and natural gas production in the first three months of 2025. Adjusted net earnings came in at $2.44 billion in Q1 2025 compared to $1.98 billion in Q4 2024. Higher output, contributions from a major acquisition, and strong natural gas prices helped drive the improved profits.
The board raised the dividend by 4% in March. This follows two dividend increases in 2024 and marks the 25th consecutive year the company has increased the distribution.
The bottom line
Market turbulence should be expected in the coming weeks and months, so I wouldn’t back up the truck. That being said, CNRL already trades at a discounted price and you get paid a solid 5.2% dividend yield to wait for things to settle down. If you have some cash to put to work, this stock deserves to be on your radar.
