Best Energy Stocks To Buy In Canada For August 2024
By:W, LeahThere is no denying that with the fast development of technology and economy, we are moving towards to more eco-friendly and sustainable energy sources and infrastructure. The reliance on fossil fuels is gradually diminishing, and renewable energy is gaining growing popularity around the world as it offers significant benefits to the entire ecosystem.
Renewable energy plays a significant role in Canada. In Canada, there is no doubt that energy stock is a good investment option under such favourable market environment. Then, what is energy stock? Is energy stock a good investment in Canada for August 2024? In this article, Let’s take a closer look at four renewable energy companies we think are the cream of the crop here in Canada.
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Table of Contents
Pros and Cons of Investing in Energy Stocks
Top Energy Stocks to Invest in Canada for August 2024
Canadian Natural Resources (NASDAQ: CNQ)
Canadian Solar Inc. (NASDAQ: CSIQ)
Enerflex (TSX:EFX)
Is Energy Stock a Good Investment in August 2024?
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What is Energy Stock?
Energy stock refers to stocks of publicly traded companies that are directly involved in the exploration, development, production, processing, transportation, and sale of energy. As energy is the foundation of global economic activity, energy stocks typically play a significant role in the stock market.
Depending on the type of energy, energy stocks can be divided into the following categories:
- Oil stocks: Stocks of companies involved in the exploration, extraction, refining, and sale of oil.
- Natural gas stocks: Stocks of companies focused on the exploration, extraction, delivery and sale of natural gas.
- Coal stocks: Stocks of companies that mine, process, and sell coal.
- Nuclear stocks: Stocks of companies engaged in research and development of nuclear power generation and related technologies.
- Renewable energy stocks: Stocks of companies in the renewable energy sector such as hydropower, wind power, and solar power.
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Pros and Cons of Investing in Energy Stocks
Investing in energy stock may be a good investment option for generous return. However, any investment carries with both opportunities and risks, so as energy stocks. If you are interested in investing energy stocks, you must be full aware of its advantages and disadvantages of investing in this sector’s stocks. Next, we are going to list the pro&cons of this investment.
| Pros of Investing In Energy Stocks | Cons of Investing In Energy Stocks |
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Top Energy Stocks to Invest in Canada for August 2024
After giving a detailed introduction about energy stocks and pros&cons of investing in them, we will list some of the best energy stocks in Canada for investors to invest in August 2024.
Canadian Natural Resources (NASDAQ: CNQ)
Founded on November 7, 1973, Canadian Natural Resources (CNQ) is an important company in the Canadian and global energy sector. As one of Canada’s largest energy companies, Canadian Natural Resources holds a significant position in the global energy market. Canadian Natural’s activities span the exploration, development, production, refining and marketing of oil and gas. Besides, CNQ exerts significant profound in oil sands and other unconventional energy projects. Its business size and market share are at the forefront of the industry and have a significant impact on the trend of the global energy market.
With the growing global focus on clean energy and sustainability, Canadian Natural Resources is also actively exploring and developing its renewable energy business. At the same time, Canadian Natural Resources will continue to strengthen its exploration and development efforts in the oil and gas sector to strengthen its leadership position in the traditional energy sector.
Canadian Solar Inc. (NASDAQ: CSIQ)
Founded in 2008, Canadian Solar Inc. is a company with significant influence in the solar energy sector. Canadian Solar mainly engages in the research and development, production and sales of solar photovoltaic products, including solar panels, photovoltaic modules, photovoltaic systems, etc. Its products are widely used in residential, commercial and industrial solar power systems. Canadian Solar has a broad market presence and good performance in the field of solar photovoltaic. Its shares are traded on the U.S. stock market under the ticker symbol CSIQ.
As a company with deep heritage and extensive influence in the field of Solar photovoltaic, Canadian Solar Inc. has played a significant role in the global solar market with its advanced technology, high-quality products and excellent market performance. With the increasing global demand for renewable energy and the increasing support of the Canadian government for photovoltaic power generation projects, the future development prospects of Canadian Solar will be brighter.
Northland Power (TSE: NPI)
Established in 1987, Northland Power is a pure-play renewable energy company, operating nearly 3 GW of electricity with a potential future capacity in excess of 14 GW from its future projects. Since its inception in 1987, Northland Power has been committed to producing electricity from renewable resources, contributing to a greener, more sustainable future.
As a company with deep heritage and extensive influence in the field of renewable energy, Northland Power has made important contributions to the global energy transformation and sustainable development with its advanced technology, rich project pipeline and excellent market performance. With a diverse global portfolio including onshore renewables, efficient natural gas energy, and regulated utilities, Northland Power’s future development prospects will be even broader.
Algonquin Power (TSE: AQN)
Founded in 1988, Algonquin Power & Utilities Corp. is a Canadian renewable energy and regulated utility conglomerate with assets across North America. Algonquin Power is committed to providing safe, reliable, cost-effective and sustainable energy and water solutions to more than 1 million customers through its portfolio of generation, transmission and distribution utilities. Notably, Algonquin Power shows stable performance in stock market, attracting the attention of many investors.
Algonquin Power is a company with significant influence and competitiveness in the energy sector, and its diversified business portfolio, strong financial strength, positive market recognition, and good corporate governance structure provide a solid foundation for its future growth.
Enerflex (TSX:EFX)
Enerflex Ltd. (TSX:EFX) is a Canadian-incorporated company focused on the engineering, manufacturing and aftermarket support of equipment, systems and turnkey facilities for natural gas processing, compression and delivery. The company reported revenue of $683 million in the first quarter of 2024, up from $610 million in the same period last year.
Enerflex aims to improve the profitability of its core businesses, reduce debt on its balance sheet and increase financial flexibility. Bay Street analysts expect Enerflex to post adjusted earnings of C $0.60 per share by the end of 2025 and a loss of C $0.90 per share by 2023, with the stock expected to rise more than 35% over the next 12 months.
All in all, while Enerflex’s financial condition and stock price performance can be affected by a variety of factors, Enerflex, with its expertise and market position, is well positioned to continue its solid growth in the future.
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Is Energy Stock a Good Investment in August 2024?
From an allocation perspective, we velieve energy stocks are under-owned and could gain further ground as flows to the sector increase. We are quite optimistic about the future of energy sector with reasons summarized as below:
Unexpected growing demand: the demand for energy surpasses consensus expectations. Even the U.S. Energy Information Administration (EIA) expects global oil demand to increase by 1.4 million barrels per day in 2024 and 2025.
Intense geopolitical tensions: as geopolitical tensions flared up, especially in the Middle East, Brent crude oil prices edged higher. These rising prices will fuel energy stocks.
Rising expectation for energy: analysts will likely raise estimates for energy stocks as oil rally making the sector compelling. Furthermore, the sector is still the most undervalued at under 12 times forward earnings. This would undoubtedly increase the attraction of energy sector, thus in turn pushing energy stocks moving higher.
However, it’s important to recognize that energy stocks can experience significant fluctuations in value. For example, S&P 500 Energy sector gained nearly 55% in 2021 and nearly 66% in 2022 before experiencing a modestly negative return in 2023. Investors are required to be aware of the potential for variable returns in the sector.
Final Words
In conclusion, for those looking for huge return from investing stocks, energy stock is undoubtedly a good option, especially in such a developed country Canada. Based on our analysis, top energy stocks we pick for Canadians include Canadian Natural Resources, Canadian Solar Inc., Northland Power, Algonquin Power and Enerflex.
However, as any investment carries risks, investors should be full aware of investment risks and keep cautious and insightful in the process of trading.
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