The Canadian Energy Stock I’d Buy Right Now — and It’s a Bargain

The situation in Iran is weighing on markets, with the S&P 500 nosediving below the 6,700 mark for the first time this year. Undoubtedly, the initial resilience in the U.S. stock market is now turning into a bit of a panic as the situation in the Strait of Hormuz looks to escalate and oil prices start marching higher again. It’s hard to keep your cool when there’s an escalating geopolitical crisis going on. Whether the spike in oil prices leads to more of a stagflationary environment remains to be seen.

Either way, the markets aren’t taking the latest developments too well, and you may be growing worried as the U.S. markets look to move closer towards that long overdue correction (one is likelier than not to hit in 2026, at least in my humble opinion).

Energy stocks are shaping up to be a vital portfolio diversifier

While panicking is never a good idea, I do think that sticking with steady dividend payers could be the way to go, especially if your portfolio has encountered wilder swings than the Nasdaq 100, which is now off more than 6% from its recent peak over AI fears, and now, the situation going on in the Middle East. It’s hard to know how things will end and what the broader implications will be. Either way, staying calm in the face of stressful headlines is key to being a successful long-term investor.

When it comes to the TSX Index, it has held its own far better than the S&P. On a brutal day for Wall Street, the TSX Index was off less than 1%. The energy stocks held up the fort while most everything else took a bit of a hit. While I wouldn’t expect WTI (West Texas Intermediate) prices to stay well above US$90 per barrel for long, there is a non-zero chance that US$100 oil could be in the cards again. And that’s the risk for investors who have no energy exposure in their portfolios.

Suncor Energy

Of course, it can be risky to buy a stock that’s already had an upward run, but in the case of Suncor Energy (TSX:SU), I still think there’s value to be had here. The stock goes for a modest 16.8 times trailing price-to-earnings (P/E), even after gaining close to 3% on Thursday’s turbulent session.

With a 3% dividend yield and a 0.75 beta, Suncor stock may very well be one of those portfolio stabilizers that’ll pay you to wait in times when oil is rocketing suddenly. Macro aside, Suncor also stands out as a great pick following its magnificent fourth-quarter beat.

Production has been moving higher, cost efficiencies are on the right track, and the firm might have what it takes to shed the long-lived discount on shares relative to peers. Even at these heights, the stock looks cheap on a number of metrics. In my view, the stock buyback program confirms this.

In any case, SU stock looks like a must-watch right here, regardless of what happens with oil prices over the near term. While Suncor isn’t as cheap or as yield-rich as it used to be, I still view it as one of the relative bargains of the large-cap basket of energy names. And for that reason, it’s still worth holding your nose and buying at these new highs.

The post The Canadian Energy Stock I’d Buy Right Now — and It’s a Bargain appeared first on The Motley Fool Canada.

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More reading

• Top Canadian Stocks to Buy With $10,000 in 2026
• 2 Undervalued Stocks and REITs Worth Buying in 2026
• TFSA Contribution Season Is Here. These 3 Canadian Energy Stocks Are Worth Considering.
• A Canadian Energy Stock Poised for Growth in 2026
• The Best Canadian Energy Stock to Buy This Month

Fool contributor Joey Frenette 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.