1 Underrated Canadian Energy Stock That Could Have a Big 2026

Some energy stocks need higher oil prices to look interesting. Yet Tamarack Valley Energy (TSX:TVE) may not be one of them. The Canadian oil producer is smaller than the headline energy giants, but it has a clearer story heading into the rest of 2026 to sharpen the business, focus on the Clearwater, return more cash to shareholders, and let the market catch up. That makes Tamarack stock one underrated Canadian energy stock that could still have a big year.

TVE

Tamarack stock produces oil and natural gas in Alberta, with its main growth engine now tied to the Clearwater oil play. Clearwater has become one of Canada’s more attractive oil regions because wells can be relatively low-cost, quick to drill, and repeatable.

The latest number that stands out is 53,016 barrels of oil equivalent per day (boe/d). That was Tamarack’s Clearwater production in the first quarter of 2026, up 19% from the same period last year. Total company production averaged 71,329 boe/d, up 5%.

That’s solid growth, but the more interesting move came after the quarter. Tamarack stock announced the sale of its Charlie Lake assets, which pushes the company closer to becoming a pure-play Clearwater producer. The dividend story improved as well. Tamarack stock is increasing its quarterly dividend by 25%, from $0.04 per share to $0.05 per share, starting in the third quarter of 2026, working out to $0.20 annually, yielding 1.63%.

Into earnings

The first quarter showed that cash flow is already doing some work. Tamarack stock generated $222 million of adjusted funds flow and $128 million of free funds flow. It also returned $66 million to shareholders through dividends and share buybacks.

The timing also looks interesting. Oil prices can move quickly, and smaller Canadian producers often react more strongly than the majors when sentiment improves. If crude prices hold up or strengthen, Tamarack stock’s free cash flow could get more attention. If the Clearwater focus improves margins and simplifies the story, the stock could become easier for investors to value.

There’s also a valuation angle. Tamarack stock still doesn’t carry the same recognition as Canada’s larger oil and gas names. That can create an opportunity if the company keeps delivering operationally. A cleaner asset base, higher dividend, and strong Clearwater output could give investors a reason to take another look.

Looking ahead

Still, this is an energy stock. The risks are real. Oil prices could fall, natural gas prices could remain weak, drilling results may disappoint, and asset sales could change the production mix. The Clearwater growth plan also needs steady execution. If costs rise or wells underperform, investor confidence could weaken.

There’s also the broader risk that energy stocks can fall even when company results look decent. Sentiment toward oil and gas moves with commodity prices, global demand, OPEC decisions, geopolitical risk, and interest rates. Tamarack stock won’t escape that volatility.

Even so, the setup looks better than many investors may realize. Tamarack stock is growing its key asset base, simplifying the company, increasing the dividend, and returning cash through buybacks. It also has enough scale to matter, but not so much scale that growth becomes impossible.

Bottom line

For investors looking beyond the usual Canadian energy giants, Tamarack stock deserves a spot on the watch list. It’s not risk-free or built for conservative income alone. Though even $7,000 can bring in solid income for compounding.

COMPANYRECENT PRICENUMBER OF SHARESANNUAL DIVIDENDANNUAL TOTAL PAYOUTFREQUENCYTOTAL INVESTMENTTVE$12.32568$0.17$96.56Monthly$6,997.76

If Clearwater momentum continues and oil prices cooperate, Tamarack stock could have a much bigger 2026 than the market is giving it credit for today.

The post 1 Underrated Canadian Energy Stock That Could Have a Big 2026 appeared first on The Motley Fool Canada.

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Fool contributor Amy Legate-Wolfe 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.