1 Canadian Energy Stock Quietly Positioning for a Big Year

Plenty of investors are looking for the kind of blue-chip Canadian energy stock that long-term investors can buy, tuck away, and let do the heavy lifting in their portfolios right now. In a sector that remains volatile, Suncor (TSX:SU) is one particular stock I have in mind.

This Canadian energy stock has a fully integrated model, improving balance sheet, and shareholder-friendly capital allocation, making it a top name to consider today.

Without further ado, let’s dive in.

Structural strength is impressive

Over the past few years, Suncor has quietly transformed itself from a more cyclical producer into a leaner industrial-style operator with improving predictability.

The company has posted record upstream production and record refining throughput, with asset utilization at or above 100%. To me, this signals a more efficient and resilient asset base. Management has also guided toward robust production levels in 2025 and beyond. That’s despite heavy expected maintenance, which tells me they’re confident in both the cost structure and reliability of operations.

That operational strength shows up in the numbers. With that, let’s dive into what Suncor has reported, and why this is a gem long-term investors should consider right now.

A balance sheet to be envied by the sector

Where Suncor really separates itself, in my view, is how it’s using its impressive cash hoard, driven by oil surging to well above US$100 per barrel, on the Brent side.

The company has continued to reduce its net debt down to roughly the company’s stated target, recently hitting the range of $6 billion to $8 billion, the lowest level in more than a decade. That deleveraging has gone hand in hand with rising shareholder returns. Suncor generated roughly $7.4 billion in free funds flow in 2024 and returned about $5.7 billion to investors through dividends and buybacks.

Today, investors get a solid dividend yield in the 2.8% range. And importantly, this yield is backed by a history of dividend growth, including high single- to low double-digit hikes in recent quarters. On top of that, Suncor has authorized roughly $3.3 billion of share repurchases in 2026, buying back stock at what still looks like a reasonable valuation in the low-teens forward price-to-earnings range.

For investors seeking a mix of income, value, and growth, that’s a compelling package.

Why buy Suncor stock right now?

In my view, putting this all together, investors have the opportunity to buy a large-cap, integrated producer with record production and utilization, structurally lower breakevens, a much stronger balance sheet, and an explicit mandate to send “all excess funds” back to shareholders.

Even after a multi-year rally, the stock still trades at a modest earnings multiple for a business generating billions in free cash flow and steadily reducing risk. That’s my kind of buying opportunity, and one I think investors should at least consider right now.

The post 1 Canadian Energy Stock Quietly Positioning for a Big Year appeared first on The Motley Fool Canada.

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More reading

• The Best Stocks to Invest $1,000 in Right Now
• Canadian Investors: Here’s the 1 Sector You Want to Own When Oil Surges
• If You’d Invested $100 in Suncor Energy 5 Years Ago, Here’s How Much You’d Have Today
• Rising Oil Prices Are a Tax on Canadians – Unless You Own These Stocks 
• Why Every Canadian Portfolio Should Have at Least 1 Energy Stock Right Now

Fool contributor Chris MacDonald has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.