The Best Stocks to Buy Right Now Are Top Energy Stocks

Top energy stocks such as Cenovus Energy, Peyto, and Tourmaline are benefiting from soaring oil and gas prices, creating shareholder value.

| More on:
Businessman holding tablet and showing a growing virtual hologram of statistics, graph and chart with arrow up on dark background. Stock market. Business growth, planning and strategy concept

Image source: Getty Images

You’re reading a free article with opinions that may differ from The Motley Fool’s premium investing services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn moresdf

We begin another week with energy stocks taking front and centre spot. The emerging energy crisis is real. It’s been caused by falling supply due to underinvestment. It’s been exacerbated by rapidly rising demand. In short, this has shifted the conversation about the oil and gas sector. This is why my list of the best stocks to buy right now consists exclusively of energy stocks. But not just any energy stocks. I’m talking top energy stocks that rank highly on financial matters as well as on operational matters. This means Cenovus Energy stock, Peyto stock, and Tourmaline stock.

Widely held beliefs of recent years are being challenged. In short, oil and gas are more crucial to our daily lives than the market recognizes. And perhaps the future can and will include these energy sources for years to come.  

Let’s uncover the three best stocks to buy right now.

Cenovus Energy stock: The right balance

As an integrated oil and gas company, Cenovus Energy (TSX:CVE)(NYSE:CVE) is looking good. Cenovus Energy is the third-largest Canadian oil and gas producer and the second-largest Canadian-based refiner and upgrader. This company has a history of operational excellence. It also has a history of strong and relatively stable cash flows.

So what specifically makes it an attractive energy stock? Well, two things. The first is that Cenovus Energy has the kind of diversification that shelters it from the bad times. The company’s refining assets might do well while its production assets struggle – and vice versa. Also, Cenovus has oil sands assets as well as natural gas assets, and everything in between. This commodity diversification adds another buffer.

Second, Cenovus Energy stock has been benefiting from rapidly rising oil and gas prices. The stock has performed exceptionally well in 2021, as we can see in the graph below.

Cenovus Energy stock best stock to buy right now

But the good times have just begun. The company will be reporting Q3 results in November. In my view, this report will be positive for the stock. I mean, oil prices rose 13% in the third quarter. And natural gas prices rose almost 100%. This will translate into soaring cash flows for Cenovus.

Peyto stock: A natural gas leader and the best stock to buy right now

As I’ve just mentioned, natural gas prices soared almost 100% in the third quarter alone. While some of this rise is certainly reflected in stock prices, I believe there’s more to come. When investors see how this rise in commodity prices translates to cash flow growth, there will be another leg up. And this is what makes Peyto Exploration and Development (TSX:PEY) one of the best stocks to buy right now.

Peyto is one of Canada’s lowest-cost natural gas producers. It operates in a very prolific resource basin that’s characterized by predictable production, low-risk exploration, and long reserve life. And it’s heavily weighted toward natural gas production, which is a great thing these days. Peyto’s stock price and its financial results are partly reflecting this reality.

Best stock Peyto

Tourmaline stock: The best stock to buy right now as it returns cash to shareholders

Tourmaline Oil (TSX:TOU) is another oil and gas stock that’s heavily weighted towards natural gas. It’s a top-quality mid-tier Canadian natural gas producer whose cash flows are also soaring along with natural gas prices. And this is rapidly translating into rising shareholder value creation.

Top stock Tourmaline

In fact, Tourmaline’s dividend growth in the last year has been nothing short of spectacular. Its regular annual dividend has grown over 40% to $0.68 per share. And the company announced a special dividend of $0.75 per share just last month. Looking ahead, management intends to continue to pay out excess cash flow in the form of dividends. This is why Tourmaline stock is one of the best stocks to buy right now.

The bottom line

Energy stocks have certainly been in the doghouse for quite some time. But in 2021, this is coming to an end. Today, oil and gas stocks represent some of the top-performing stocks. Their businesses are booming. Just take a look at Cenovus Energy stock, Peyto stock, and Tourmaline stock. They’re three of the best stocks to buy right now.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium service or advisor. We’re Motley! Questioning an investing thesis — even one of our own — helps us all think critically about investing and make decisions that help us become smarter, happier, and richer, so we sometimes publish articles that may not be in line with recommendations, rankings or other content.

Fool contributor Karen Thomas owns shares of Peyto and Tourmaline. The Motley Fool has no position in any of the stocks mentioned.

More on Energy Stocks

Group of industrial workers in a refinery - oil processing equipment and machinery
Energy Stocks

Up by 25%: Is Cenovus Stock a Good Buy in February 2023?

After a powerful bullish run, the energy sector in Canada has finally stabilized, and it might be ripe for a…

Read more »

A worker overlooks an oil refinery plant.
Energy Stocks

Cenovus Stock: Here’s What’s Coming Next

Cenovus stock has rallied strong along with commodity prices. Expect more as the company continues to digest its Husky acquisition.

Read more »

A stock price graph showing growth over time
Energy Stocks

What Share Buybacks Mean for Energy Investors in 2023 and 1 TSX Stock That Could Outperform

Will TSX energy stocks continue to delight investors in 2023?

Read more »

Arrowings ascending on a chalkboard
Energy Stocks

2 Top TSX Energy Stocks That Could Beat Vermilion Energy

TSX energy stocks will likely outperform in 2023. But not all are equally well placed.

Read more »

Gas pipelines
Energy Stocks

Suncor Stock: How High Could it Go in 2023?

Suncor stock is starting off 2023 as an undervalued underdog, but after a record year, the company is standing strong…

Read more »

oil and natural gas
Energy Stocks

Should You Buy Emera Stock in February 2023?

Emera stock has returned 9% compounded annually in the last 10 years, including dividends.

Read more »

grow money, wealth build
Energy Stocks

TFSA: Investing $8,000 in Enbridge Stock Today Could Bring $500 in Tax-Free Dividends

TSX dividend stocks such as Enbridge can be held in a TFSA to allow shareholders generate tax-free dividend income each…

Read more »

oil and natural gas
Energy Stocks

3 TSX Energy Stocks to Buy if the Slump Continues

Three energy stocks trading at depressed prices due to the oil slump are buying opportunities before demand returns.

Read more »