The energy sector remains a compelling option for investors seeking steady cash flows and good value, despite the current focus on green energy initiatives. While renewable energy sources like wind, solar, gas, and nuclear are gaining momentum, the transition to a greener future may take many years. Additionally, with increasing global energy demands, fossil fuels are likely to remain relevant, especially in countries without clear plans for transitioning to green energy.
The outcome of the U.S. election, particularly between Biden and Trump, could significantly impact oil prices. A Trump victory may benefit oil stocks while renewable energy stocks may favor a Biden win. Regardless of the election outcome, energy stocks appear undervalued, especially for investors prioritizing real earnings and cash flow over speculative growth narratives.
Two Canadian energy stocks, TC Energy and Cenovus Energy, stand out as attractive investments. TC Energy, a midstream energy company, offers a high dividend yield and potential value unlock with a planned spin-off of its crude pipeline business. Cenovus Energy, on the other hand, is positioned well for sustained oil prices, trading at a low P/E ratio and offering a solid dividend yield. Both stocks present compelling opportunities for investors looking to capitalize on the energy sector’s potential growth in the next 18 months.
