2 Canadian Energy Stocks That Still Look Cheap Today

Canadian energy stocks still look interesting when they’re cheap, despite volatility in the sector. That’s because this sector tends to make money in bursts, not in perfectly smooth lines. When sentiment sours, investors often lump the whole group together and push down prices even when cash flow stays solid. That can open the door for patient investors. Right now, a few Canadian producers still trade at reasonable valuations, pay meaningful dividends, and have enough operational strength to handle some commodity swings without falling apart.

PEY

Peyto (TSX:PEY) looks cheap today as it’s still tied closely to natural gas. That part of the market can scare investors fast. But this is not a fragile operator. Peyto is a natural gas-weighted producer focused on Alberta’s Deep Basin, where it has built a reputation for low costs and disciplined execution. Over the last year, the energy stock kept showing why that matters. It delivered record fourth-quarter production, strong reserves additions, and kept its hedge book active to protect cash flow from weak AECO pricing.

The earnings were solid. Peyto reported 2025 funds from operations (FFO) of $860.5 million, or $4.24 per diluted share, and annual free funds flow of $375.2 million. Net earnings came in at $418.6 million, or $2.06 per diluted share, while net debt fell by $171 million. The energy stock trades at roughly 11.6 times 2025 earnings with a 5.5% yield. That doesn’t look demanding for a producer that also returned $264.9 million in dividends in 2025.

The future outlook is what makes Peyto fit this list. Production averaged 134,055 barrels of oil equivalent per day (boe/d) in 2025 and hit a record 140,794 boe/d in the fourth quarter, while management pointed to strong well results and a hedge position that should keep protecting part of 2026 and 2027 output. The obvious risk is gas prices. If natural gas weakens again, the stock could stay moody. But for investors who want a cheap energy name with real profitability, Peyto still looks worth watching.

WCP

Whitecap Resources (TSX:WCP) looks cheap for a different reason. It gives investors a larger, more oil-weighted business, but the energy stock still doesn’t look expensive after a huge year. Whitecap explores and produces oil and gas across Western Canada, and over the last year, it made its biggest move yet by merging with Veren in a $15 billion all-share deal. That gave it more scale, deeper Montney and Duvernay exposure, and expected annual synergies of more than $200 million.

The numbers were hard to ignore. Whitecap reported 2025 petroleum and natural gas revenue of $5.63 billion, net income of $984.6 million, and funds flow of $2.94 billion. Free funds flow hit $888.5 million, and average production climbed to 307,245 boe/d. The energy stock trades at about 14.3 times earnings with a 5.2% yield. That is not dirt cheap, but it still looks reasonable for a larger producer that just transformed its asset base.

Whitecap’s outlook also looks strong. Management says the Veren integration went well, 2025 exceeded guidance, and 2026 production is expected to rise to 370,000 to 375,000 boe/d. That kind of growth gives the energy stock a better chance to rerate if energy prices cooperate. The risk, of course, is that oil prices soften or integration savings disappoint. Still, for investors who want a bigger Canadian energy name with scale, dividends, and growth, Whitecap looks like a solid, cheap stock today.

Bottom line

If you’re hunting for cheap Canadian energy stocks, these two give you different flavours of value. Peyto offers natural gas leverage and tighter-cost execution. Whitecap offers scale, oil exposure, and a bigger post-merger platform. Plus, both offer immense income even with a $7,000 investment.

COMPANYRECENT PRICENUMBER OF SHARESANNUAL DIVIDENDANNUAL TOTAL PAYOUTFREQUENCYTOTAL INVESTMENTPEY$23.92292$1.32$385.44Monthly$6,984.64WCP$14.30489$0.73$356.97Monthly$6,992.70

Neither is risk-free, because energy never is. But when the sector still trades at reasonable levels, both look like names long-term investors should keep on their radar.

The post 2 Canadian Energy Stocks That Still Look Cheap Today 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 recommends Whitecap Resources. The Motley Fool has a disclosure policy.