Among the Canadian energy stocks I don’t focus on enough, Tamarack Valley Energy (TSX: TVE) has to be up there on the list. This Canadian oil and gas producer has continued to produce strong results in recent years, with its Clearwater and Charlie Lake operations leading to strong overall production growth over time.
As the chart above shows, it’s been a wild ride higher for investors over the past five years. Indeed, over this time frame, shares of TVE stock have surged more than 450% at the time of writing.
Now, the obvious question moving forward is whether this growth can continue. Let’s dive into what Tamarack Valley does and why this stock looks attractive to investors right now, in my view.
Source: Getty Images
Strong operating results
With any potential new investment, those looking to put capital to work should first assess a given company’s underlying fundamentals. On this front, there does appear to be plenty of positives for investors to look at with Tamarack Valley Energy.
The company produced strong Greene and earnings growth, with Tamarack Valley’s earnings per share surging from a loss of $0.06 in the same quarter a year prior to $0.12 this past fiscal quarter. Additionally, in the first quarter, the company saw its revenue surge to $332 million from $272 million a year prior, as the company’s free funds flow doubled on a year-over-year basis.
Those are the kinds of numbers investors certainly want to see, particularly in a volatile energy price environment. With strong operational execution, cost discipline, and the success of the company’s waterflood and drilling programs leading the way, there should be more positives in store for investors over the long term.
Strong balance sheet and reasonable valuation
There are a number of other fundamental factors I like when I look at Tamarack Valley’s balance sheet and overall valuation.
On the balance sheet front, the company’s debt-to-equity ratio of just 37% is very reasonable, suggesting a prudent use of long-term debt. Additionally, the company has done well to reduce its overall debt burden over time, piling its free cash flow back into debt repayment while also paying investors a hefty dividend for their trouble.
With a current dividend yield of 3.2%, Tamarack Valley is a sneaky dividend stock with plenty of growth upside. As the company continues to guide toward 65,000-67,000 barrels of oil equivalent per day in the year to come, there’s plenty to like about the company’s financial picture. That goes double for those who factor in continued margin improvements from cost reductions and enhanced wellhead realizations over time.
