Should You Buy Cenovus Stock While It’s Below $20?

Cenovus stock is under $20, so you need to consider this stock before it starts surging.

Let’s face it: Canadian energy stocks aren’t the flashiest investments on the market. But every once in a while, a stock like Cenovus Energy (TSX: CVE) starts flashing value signals for long-term investors. Cenovus has quietly delivered a strong first quarter in 2025. All while oil prices hover in a volatile range and investors wait to see what central banks do next. Now, it might just be the kind of opportunity that’s easy to overlook.

So should you buy it while it’s still trading below $20? Let’s look at the facts before jumping in.

Woman checking her computer and holding coffee cup

Source: Getty Images

Into earnings

In Q1 2025, Cenovus posted net earnings of $859 million, a significant jump from just $146 million in Q4 2024. Adjusted funds flow hit $2.2 billion, up from $1.6 billion the previous quarter, and the energy stock generated $983 million in free funds flow. That’s a healthy amount of cash being churned out, especially when you consider the $595 million returned to shareholders through dividends, share buybacks, and the redemption of preferred shares.

The energy stock isn’t standing still either. It increased its base dividend by 11%, now sitting at $0.80 per share annually. For yield-seeking investors, that’s a nice bump backed by a commitment to return 100% of excess free funds flow, once it hits $4 billion in net debt. As of March 31, 2025, net debt stood at $5.1 billion, slightly up from $4.8 billion due to working capital needs, but still heading in the right direction.

Working hard

Operationally, Cenovus is firing on all cylinders. Upstream production came in at 818,900 barrels of oil equivalent per day (BOE/d), edging past last quarter’s already high 816,000 BOE/d. Downstream throughput also held steady at 665,400 barrels per day, and Canadian refining hit a record utilization rate of 104%. U.S. refining performance improved too, thanks to fewer shutdowns and narrower price differentials.

The energy stock is also progressing with its growth projects. Narrows Lake started steaming in April and first oil is expected in Q3. Sunrise brought another pad online, and Foster Creek’s optimization is now 75% complete. West White Rose is about 90% done and on track for first oil in mid-2026. These aren’t pie-in-the-sky plans, but instead well underway, and aimed at boosting production without needing major new steam infrastructure.

Considerations

Here’s the thing, though: Cenovus still faces headwinds. While the operational results are solid, free funds flow did dip from $1.2 billion in Q1 2024 to $983 million this quarter. The energy stock also saw a drop in cash from operating activities compared to both last quarter and the year before. Plus, turnaround costs in U.S. refining are expected to be significant in Q2, ranging from $240 to $295 million. And that $4 billion net debt goal still isn’t quite within reach.

So, if you’re wondering whether Cenovus is a good buy while it’s trading under $20, it comes down to what you want in your portfolio. If you’re looking for a cash-flowing, dividend-growing energy name with large-scale projects nearing completion, it’s definitely worth a closer look. But if you’re after short-term growth or worried about oil price volatility and maintenance costs eating into earnings, you might want to wait for a bigger margin of safety, or at least see if it drops a bit more during market dips.

Bottom line

Cenovus won’t be the energy stock that doubles overnight. It’s the kind of name that sits in your portfolio, throws off cash, and gradually improves its balance sheet while executing its long-term strategy. It’s not a gamble, it’s more of a patient play.

Whether that fits your investing style is the real question. But if you’ve got room for a resilient, well-managed energy stock that’s quietly delivering on its promises, Cenovus might just be worth scooping up while it’s trading below $20. Just make sure you’re comfortable with the oil sector’s ups and downs, and don’t forget to watch those turnaround costs in Q2.

Fool contributor Amy Legate-Wolfe has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.

More on Energy Stocks

middle-aged couple work together on laptop
Energy Stocks

Do Canadians Really Need $1.7 Million to Retire? Here’s How to Check Your Number

The $1.7 million survey-based retirement savings target may not be the actual number most Canadians need to retire comfortably.

Read more »

runner checks her biodata on smartwatch
Energy Stocks

Turning 60 in 2027? Taking CPP Early Shrinks Your Cheque 36%

Taking CPP early means more years of payments but smaller monthly cheques. A simple calculation shows what waiting requires.

Read more »

Hourglass projecting a dollar sign as shadow
Energy Stocks

Investing $1,000 Today vs. Waiting for the “Perfect” Moment

You can invest $1,000 today and put it to work in resilient Canadian stocks rather than wait for the “perfect”…

Read more »

Canadian dollars in a magnifying glass
Energy Stocks

Canada’s Bank Watchdog Just Dropped Its Risk Outlook: This Dividend Stock Shrugs it Off

Emera offers a different source of dividend income from Canadian banks, although its financing costs still deserve close attention.

Read more »

diversification is an important part of building a stable portfolio
Dividend Stocks

Diversification 101: How Beginners Can Protect Against Market Shocks

Stocks like TD Bank and Fortis provide an anchor to a well-diversified portfolio for resilient long-term performance.

Read more »

chart reflected in eyeglass lenses
Energy Stocks

Is Emera Stock a Buy Before Its Proposed Merger With Canadian Utilities?

A reliable dividend and the prospect of a much larger utility business make Emera stock worth watching before the merger.

Read more »

Board Game, Chess, Chess Board, Chess Piece, Hand
Energy Stocks

Cenovus Energy Plans to Buy Athabasca Oil for $5.7 Billion: Is the Stock a Steal Before the Deal?

Cenovus is paying $5.7 billion for Athabasca Oil. Here is what the deal means for ATH stock and whether it…

Read more »

electrical cord plugs into wall socket for more energy
Energy Stocks

Better Stock to Buy Now: Fortis vs. Hydro One

Let’s compare Fortis and Hydro One to determine which utility stock offers the more compelling investment opportunity amid ongoing macroeconomic…

Read more »