Investing in the stock market when the market is so volatile can feel too overwhelming, especially if you’re new to investing. The war in the Middle East has been impacting markets worldwide, especially with the closing of the Strait of Hormuz and its effect on the energy sector. However, the closing of the point where around a fifth of the world’s crude oil crosses to get to its destination might be a blessing in disguise for Canadian energy stocks.
After years of capital expenses to streamline and improve operations, Canadian energy companies are capable of producing greater volumes with much better cost-efficiency. Now, add the increase in demand and higher commodity prices, and you have a setup for a much stronger future for the Canadian energy industry than it was a few years ago.
Considering all these factors, investing in the Canadian energy sector seems like a good way to put your money to work in an uncertain market. To this end, there is one solid stock that I would advise investing in for the long run: Suncor Energy Inc. (TSX: SU).
Suncor Energy
If you are willing to bet on the Canadian energy sector, why not invest in a company that has a part to play in pretty much every aspect of the industry? Some energy stocks focus solely on production, and others more on transporting crude or providing other vital infrastructure that serves oil and gas producers. Suncor Energy is a $109 billion market capitalization giant in the Canadian energy industry with an integrated business model.
Suncor does everything from extracting the oil to refining and selling it through its wholesale and retail distribution networks. When oil prices are high, production operations have a lower margin but refining and selling the end-product has greater margins. Conversely, when prices are lower, Suncor can offset lower margins in downstream operations through better profits in upstream and midstream operations.
Due to several issues over the years, Suncor had lost a lot of good faith from investors. The company has been aggressively making changes to prove to its investors that it can turn things around. After a stretch of solid production, refining, and improved cash flow, Suncor has reestablished itself as a reliable investment in the energy industry.
Foolish takeaway
The company’s turnaround isn’t a fad. The fourth quarter of its fiscal 2025 showed that Suncor reported a $1.10 jump in its adjusted earnings per share. The stock also generated $12.8 billion in adjusted funds from operations for the full year, and $6.9 billion in free funds flow. The company has been active in distributing its shareholder dividends, having returned $5.8 billion to investors through dividends and share buybacks.
If there is one Canadian energy stock that is poised to deliver substantial and outstanding long-term returns, it seems to be Suncor Energy. As of this writing, the stock trades for $91.86 per share, and it boasts a 2.6% dividend yield that you can lock into your portfolio today.
