The TSX Composite Index is continuing to reach new record highs in July 2025, having already surged by 9.6% year-to-date. But interestingly, not every stock is following that trend. Some solid companies from the energy sector are still trading well below their highs, giving investors a rare chance to pick up long-term winners at discounted prices.
In this article, I’ll spotlight one such undervalued Canadian energy stock that’s trading at a heavy discount and explain why it could be a top stock to buy and hold now.
A discounted energy giant showing strength under pressure
That brings me to Cenovus Energy (TSX: CVE), a stock that I believe deserves a closer look right now. This Calgary-based company is a major integrated oil and gas producer with operations spread across Canada, the United States, and Asia Pacific.
CVE stock is currently trading at $19.50 per share with a market cap of $35.3 billion. It also offers a quarterly dividend that translates into an annualized yield of about 4.1%.
Despite strong long-term fundamentals, Cenovus shares have slipped 31% over the last year, making it one of the few large-cap stocks trading at such a wide discount. However, this dip doesn’t reflect the strength in its operations or the improvements it’s making under the hood.
Operating momentum is picking up
Even as its stock has disappointed lately, Cenovus is continuing to showcase the ability to deliver consistent upstream performance while pushing forward with major expansion projects. In the first quarter of 2025, the company’s production stood at 818,900 barrels of oil equivalent per day, reflecting a slight improvement over the previous quarter and closing in on all-time highs. Its downstream segment also operated efficiently, with a crude throughput of 665,400 barrels per day.
While Cenovus posted a YoY (year-over-year) drop in its adjusted net profit to $859 million for the first quarter, the profit figure surged more than fourfold sequentially. The YoY decline was mainly due to lower oil prices and planned maintenance, but operating margins still came in strong.
Meanwhile, Cenovus Energy’s revenue for the quarter rose 4% sequentially to $13.3 billion with the help of higher upstream sales volumes and a recent rebound in oil prices. Similarly, its adjusted funds flow reached $2.2 billion in the latest quarter, which left Cenovus with nearly $1 billion in free funds flow to reinvest or return to shareholders.
Focused investments could drive long-term upside
Another key factor that makes Cenovus a truly energetic stock to buy and hold now is its consistent focus on long-term growth initiatives. The company is nearing completion on major projects like Narrows Lake and West White Rose, both of which are expected to start producing within the next 12 months. These are high-return developments that don’t require huge ongoing capital.
Similarly, its turnaround at Foster Creek is moving forward smoothly, with key tie-ins scheduled this year. And after a short wildfire-related disruption, operations at Christina Lake have also been fully restored. Overall, its financial flexibility and efficient execution could put Cenovus in a strong position to benefit even more if oil prices remain stable or rise from here.
