Investors are always looking for breakout stocks, and lately, the spotlight has shifted to Canada’s energy sector. While gold has attracted attention, oil has been quietly staging a comeback of its own. Whitecap Resources (TSX:WCP) is a name that might not be on everyone’s radar, but it should be. With shares up more than 85% over the last 12 months, many might think the boat has already sailed. But here’s the thing: Whitecap still has room to run.
Into earnings
The company’s recent financial results and strategic moves suggest there’s more to this rally than just a short-term pop. Amid strong cash flow, a high-yield dividend, and operational momentum, Whitecap stock has become a surprisingly solid energy play.
In the first quarter of 2025, Whitecap reported petroleum and natural gas revenue of $942.2 million, up from $868.3 million a year earlier. Net income more than doubled year-over-year to $162.6 million, or $0.28 per basic share, compared to $0.10 last year. Funds flow came in at $446.3 million, or $0.76 per basic share, marking a 17% increase per share.
What stands out even more is free funds flow, which hit $48.2 million this quarter, despite heavy capital spending. With net debt down to $986.9 million compared to $1.5 billion a year ago, the company is in a much stronger financial position. Whitecap stock now has a net debt-to-annualized funds flow ratio of just 0.6, giving it flexibility even if commodity prices take a dip.
More to come
On the operations front, Whitecap is firing on all cylinders. First-quarter production came in at 179,051 boe/d, well above internal forecasts. This included 93,765 barrels of oil per day, 22,167 barrels per day of NGLs, and 378,715 mcf/d of natural gas. What’s even more encouraging is that the company is seeing stronger-than-expected performance from both new and existing wells across its unconventional and conventional assets.
A big part of the company’s story this year is its strategic combination with Veren. The merger creates a dominant light oil and condensate player with extensive land holdings in the Alberta Montney and Duvernay formations. With this deal, Whitecap becomes the largest Alberta Montney and Duvernay landholder and enhances its presence in Saskatchewan’s light oil space.
This expanded footprint means greater scale, more drilling opportunities, and operational synergies that could improve margins and cash flow. It also positions the company to handle uncertainty in global oil markets, especially with tariffs and macro risks in play. In fact, Whitecap stock already stated its intention to keep capital spending and dividends fully covered by funds flow, even if oil dips to US$50 per barrel.
Foolish takeaway
Speaking of dividends, Whitecap continues to reward shareholders. The company paid out $107.2 million in dividends during Q1 2025, or $0.18 per share, offering an annualized yield of roughly 7.1% at recent prices. That’s one of the best yields on the TSX, and it’s backed by strong free cash flow. The current payout ratio sits comfortably around 50%, suggesting the dividend is sustainable. Right now, a $20,000 investment would bring in $1,421 annually, or pay out about $118 monthly!
| COMPANY | RECENT PRICE | NUMBER OF SHARES | DIVIDEND | TOTAL PAYOUT | FREQUENCY | TOTAL INVESTMENT |
|---|---|---|---|---|---|---|
| WCP.TO | $10.27 | 1,947 | $0.73 | $1,421.31 | Monthly | $19,995.69 |
Despite the price surge, Whitecap still trades at a trailing price-to-earnings (P/E) ratio of just 7.1 and a forward P/E below 10. Its price-to-book is around 1.1 and enterprise value to EBITDA sits at 6.3 – fair metrics given the growth ahead. Plus, its long-term strategy is clear. The company targets 3% to 5% annual production growth, balance sheet strength, and consistent dividend payouts. That’s the kind of play that could work in both bullish and bearish oil markets.
Whitecap stock isn’t as flashy as a tech startup or as widely discussed as the big banks, but that might be its edge. It has quietly become one of the best-performing names on the TSX. And even with an 85% rally in the rearview mirror, Whitecap Resources still deserves a place on your watchlist, especially if you’re after income and growth in one package.
