Building a long-term portfolio that can provide income and growth opportunities takes a lot of time, patience, ongoing investments, and financial discipline. It also involves picking the right investments, the kind that you can buy and hold for decades to become a winner in the long run with multi-fold returns.
Even the most reliable investments in blue-chip stocks might make investors worry with short- to medium-term volatility. However, patient investors who make well-informed decisions about how they invest know better than to let baseless noise alone dictate their portfolio. There is one TSX stock that was at its peak almost two decades ago, Suncor Energy (TSX:SU).
As of this writing, Suncor stock trades for $69.61 per share. Around May of 2008, the stock saw its all-time peak at $70.34 per share. Today, we’ll take a look at this battered and bruised energy stock making a comeback.
Suncor Energy
Suncor is a $83.62 billion market cap TSX integrated energy company that is in a league of its own in the oil and gas sector. The company is involved in every part of the energy industry across North America, besides midstream operations. Suncor extracts and sells crude oil, also refining it into fuels and other chemicals. Suncor also has a chain of gas stations under its belt that it can use to sell finished products that it refines from its extraction operations.
Suncor even carved out a small presence in the renewable energy space, but has since pivoted away to focus on its core operations.
The business
Operational synergies and diversification characterize the strength of Suncor stock. It is involved in several sub-sectors within the energy industry with its integrated business model. This allows Suncor to benefit from various stages of the energy market. Where higher commodity prices might impact its crude oil extraction operations, improved margins in refining the crude can offset those expenses to shield the stock from their impact. The same applies in the opposite scenario.
Suncor’s refining business relies mainly on producing the gasoline that it sells, but it also makes money with other chemicals it produces. The company also has natural gas operations that operate well. The diversification and resilience in its business model might be fundamental reasons why Suncor is outperforming the broader market right now.
Foolish takeaway
At $69.61 per share, Suncor stock is up by 225.43% in the last five years. In the same period, the S&P/TSX Composite Index, which is the benchmark for the Canadian stock market, is up by 91.18%. Suncor has outperformed the rest of the market by a substantial margin, and that spells out why it might be an excellent investment to own right now.
While Suncor Energy might be prone to the impact of macroeconomic factors, the stock has proven its resilience time and again over the years. Being one of the largest integrated energy companies in North America, this oil stock might be worth adding to your self-directed investment portfolio at current levels.
