Recently, geopolitical tensions between Russia and Ukraine have taken center stage, driving market volatility and driving crude prices higher. “The oil market was waiting for a major catalyst to justify a move above $100,” said Oanda’s Ed Moya, when he cited the situation at the Russia – Ukraine border as a catalyst that could threaten supplies and send oil prices another 10% higher.
Zooming out to a wider timeframe, given today’s strong economic growth, many believe oil prices could move even higher in 2022. In a report provided to clients, analysts at BCA research said they believe prices will rise over the next decade in the face of increasing demand and declining supplies. According to the report, threats to supplies include government action that curbs fossil fuel production as well as “climate activism at the board level at major energy suppliers and in the courtroom.”
Today we’re focusing on an oil name that should not be overlooked by investors looking for long-term potential or those looking to capitalize off of oil’s recent volatility.
When it comes to energy, Canada stands out with its expansion of fossil-fuel production. Oil giant Canadian Natural Resources LTD (CNQ) has the largest undeveloped base in the Western Canadian Sedimentary Basin, is the largest independent producer of natural gas in Western Canada, and the largest producer of heavy crude oil in Canada.
Higher oil and gas prices have substantially improved energy companies’ earnings in recent months. CNQ has utilized this excess cash to return to shareholders and improve its balance sheet. The company lowered its debt from around $35 billion in 2020 to $18 billion at the end of Q3 2021. Canadian Natural could see more upside if energy commodities continue to trade strongly.
Considering the potential tailwinds for the industry and for CNQ itself, it would make sense for the massive oil company’s stock to trade at a premium price, but actually, the opposite is true. Potential investors will be relieved to know that the stock has a trailing twelve-month P/E ratio of 15, in line with the industry average.
The pros on Wall Street agree that CNQ shares are ripe for the picking. Of 22 analysts offering recommendations, 14 rate the stock a Buy, and 8 give it a Hold rating. There are no Sell recommendations. CNQ also boasts an attractive 3.5% dividend.
The company will release Q4 earnings in early March. Management’s commentary and the quarterly performance will be key factors influencing the stock.
Should you invest in Canadian Natural right now?
Before you consider buying Canadian Natural, you'll want to see this.
Investing legend, Keith Kohl just revealed his #1 stock for 2022...
And it's not Canadian Natural.
Jeff Bezos, Peter Thiel, and the Rockefellers are betting a colossal nine figures on this tiny company that trades publicly for $5.
Keith say’s he thinks investors will be able to turn a small $50 stake into $150,000.
Find that to be extraordinary?
Click here to watch his presentation, and decide for yourself...
But you have to act now, because a catalyst coming in a few weeks is set to take this company mainstream... And by then, it could be too late.
Click here to find out the name and ticker of Keith's #1 pick...
