Canadian Natural Resources (TSX:CNQ) picked up some momentum after the tariff rout earlier this year, but the stock still sits well below its 2024 highs. Contrarian investors are wondering if CNQ stock is undervalued and good to buy for a self-directed Tax-Free Savings Account (TFSA) or Registered Retirement Savings Plan (RRSP) focused on dividends and total returns.
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CNQ share price
Canadian Natural Resources trades near $47 per share at the time of writing, compared to $55 last year when the price of oil was much higher.
West Texas Intermediate (WTI) oil currently sells below US$60 per barrel. That’s down from more than US$80 in 2024. This is the main reason CNRL’s share price hasn’t tracked the gains of the broader TSX this year.
Oil market outlook
Analysts broadly expect oil prices to remain under pressure in 2026. Record production in Canada and the United States, along with supply increases from OPEC and other producers, will more than offset demand growth. In addition, any news of a peace deal between Russia and Ukraine could lead to reduced sanctions on Russian oil.
On the demand side, China continues to face economic challenges connected to its property crisis and ongoing tariffs imposed by the United States. As long as these issues persist, there will probably be weak oil demand from the world’s largest oil buyer. The U.S. is the second-largest consumer of oil. In the event the American economy slides into a recession caused by high tariffs or a jump in inflation, oil prices could come under additional pressure.
In recent days, there has been some analyst chatter that WTI oil could fall below US$55 in 2026, with the more pessimistic predictions suggesting a potential dip below US$40 at some point. If that happens, oil producers will likely see their share prices come under more pressure.
Beyond 2027, however, the market should rebalance and, as often happens with commodity cycles, the price could rebound significantly.
CNRL earnings
Canadian Natural Resources continues to deliver earnings growth, even in the current market conditions. The company generated $5.733 billion in adjusted net earnings from operations in the first nine months of 2025 compared to $5.437 billion in the same period last year.
The growth is due to higher production arising from strategic acquisitions and successful drilling programs across the asset base. CNRL is primarily known for its oil operations that include oil sands, conventional light and heavy oil, and offshore oil assets. The company is also a major natural gas producer in Western Canada.
Opportunities
Natural gas demand is expected to increase considerably in the coming years as gas-fired power generation facilities are built to provide electricity for AI data centres.
New pipeline capacity and the construction of liquified natural gas (LNG) export terminals on the coast of British Columbia give CNRL and other Canadian natural gas producers access to global LNG markets where they can get higher prices for their product.
Oil export capacity has also increased for Canadian energy companies with the completion of the Trans Mountain expansion. Additional capacity growth could be on the way.
Dividends
CNRL raised the dividend in each of the past 25 years. Investors who buy CNQ stock at the current level can get a dividend yield of 5%.
Should you buy now?
Investors should expect ongoing volatility, but additional downside would be viewed as an opportunity to add to the position. CNRL remains very profitable and pays you well to wait for a rebound in the oil market. If you have some cash to put to work, this stock deserves to be on your radar.
