Sometimes, it’s a good idea to stay aboard a winning investment, even when most are taking a bit of profit off the table following a sizeable run. Undoubtedly, if the valuation is still on the lower end of the range and the price is still well below your estimate of its true worth, there might be a few, if any, reasons to hit that sell button. Unless, of course, you need to shore up some cash to meet some personal expenditure.
Either way, hanging onto winners may very well be your ticket to even more big wins. And in the case of the following energy stock, I still think it’s worth hanging on for the long haul, at least until the improving narrative is fully appreciated by Wall and Bay Street.
Of course, there are quite a few uncertainties that make some of the energy producers a rather difficult buy, especially if oil prices are bound to face more headwinds going into the new year. Though I wouldn’t go as far as to expect oil prices to fall to (and stay around) US$30 per barrel of WTI, I do think that investors should be prepared for any such scenarios, especially if there is an oil glut in the cards at some point down the road.
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Suncor had a strong quarter despite lower oil prices
The best way to bet on energy might be to stick with the large-cap producers that can break even at fairly low oil prices. Even then, long-term thinkers should be prepared to keep buying the dip. In this piece, we’ll check in on shares of Suncor Energy (TSX: SU), which still scream value, even as shares hover around multi-year highs just north of $62 per share. Undoubtedly, a lot is going right for Suncor, which has constantly traded at quite a discount to the large-cap peer group. With a very strong quarter in the books, I think the days of hefty discounts on shares of Suncor Energy may very well be coming to a close.
Sure, oil prices may have taken a hit to the chin in recent months, but that didn’t stop Suncor from clocking in an unbelievable result, with production hitting new records. Just looking at the stock chart, you wouldn’t know that the energy scene has faced subtle pressures of late.
Suncor stock wins a pretty big upgrade
Either way, I’m a big fan of a firm that can march higher, even amid industry challenges. With shares still going for 14.6 times trailing price-to-earnings (P/E), I see plenty of value to be had post-Q3. Recently, analysts over at Raymond James upgraded SU stock to an outperform (that’s the equivalent of a buy), going as far as to refer to the name as a “buy-and-raise juggernaut.” They’re absolutely right. Suncor Energy is really standing out and could continue higher, even if it means leaving the rest of the pack behind as lower oil prices begin to bite.
Moving ahead, I think more of the same could be in the cards, as Suncor raises the bar despite question marks surrounding the energy patch. And that makes the name one of the best value bets, in my view, for the new year.
