These oil stocks could fuel your investment portfolio in 2022

After receiving a boost from the Russian-Ukrainian conflict in the first half of 2022, oil prices have fallen over the past three months. From a high of around $120 in June, they now sit at $87.5, and a host of factors including recession fears, shrinking factory activity in China for a second consecutive month and concerns about growth in Europe are not helping.

Nonetheless, the oil industry has been an important value creator for investors this year, and Occidental Petroleum (NYSE: OXY) (GB:0KAK) is a good example. In this article, we’ll look at two other names in the space, Suncor Energy (NYSE:SU) (EAST: SU) and Enbridge (NYSE: ENB) (GB:0KTI) (EAST:ENB), which seem promising at the moment.

Suncor is moving towards a sustainable future

Shares of this integrated energy company have jumped 73.2% in the past year, and William Janela of Credit Suisse expects the stock to rise another 49.75% to a price target of $48.80. The analyst has a buy rating on the SU stock.

The Canadian company is engaged in activities such as oil sands development, conventional and offshore oil and gas production, and petroleum refining. Suncor also has a network of fast charging stations for electric vehicles, called Electric Highway, in Canada.

The company’s revenue grew from $19.38 billion in 2020 to $30.95 billion in 2021. It is still expected to reach $45.22 billion in 2022. At the same time, Suncor recorded a turnaround: from a net loss per share of $1.15 in 2020 to earnings per share of $2.03 in 2021. The figure is now expected to climb to $7.46 in 2022.

Additionally, Suncor’s downstream operations are the most profitable in the North American region on a per barrel basis.

The company recently increased its quarterly dividend and bought back about 4% of its public float in the second quarter. Right now, its quarterly dividend of $0.36 indicates an impressive dividend yield of 3.44%.

What is the future of Suncor shares?

The company aims to spend 75% of the excess funds it generates on buying back its shares. This should continue to generate value for investors. With a price/earnings multiple of 6.4, a price/sales ratio of 0.89 and a return on equity of 24.59%, Suncor looks quite attractive at current levels.

Suncor’s global consensus rating on Wall Street is a Moderate Buy. SU’s average price forecast of $43.80 indicates a further upside of 35.52%.

Several positives are at stake for Enbridge

Unlike Suncor, Enbridge has only risen 4.8% over the past year, and the street is seeing a modest 10.5% rise in the stock, which has a moderate buy consensus rating and a average price target of $45.55.

Nonetheless, this energy infrastructure provider is moving toward expanding its traditional pipeline assets and export operations while making progress in low-carbon opportunities.

Due to robust demand and execution, Enbridge’s revenue grew from $30.7 billion in 2020 to $37.2 billion in 2021. The measure is expected to reach $40.2 billion in 2022. At the same time, EPS increased from $1.91 in 2020 to $2.15 in 2021. to increase to $2.25 per share in 2022.

Enbridge is expanding its operations on the US Gulf Coast through a joint venture merger with Phillips 66 and will operate the Gray Oak Pipeline. Importantly, he expects the Permian oil supply to increase by around two million barrels per day by 2030.

Through this transaction, Enbridge’s indirect interest in Gray Oak increased from 22.8% to 58.5%. At the same time, its risks related to fluctuations in commodity prices should decrease with the reduction of DCP’s stake (13.2% against 28.3%). The deal will also mean a cash payment of $400 million to Enbridge from the merged entity.

As its European offshore wind portfolio continues to grow, Enbridge is also investing in wind, solar, hydrogen, renewable natural gas and carbon capture and storage.

Does Enbridge pay a dividend?

Enbridge’s recent dividend of $0.66 indicates a mouth-watering dividend yield of 5.99%. Additionally, with a price to sales ratio of 1.69 and a price to cash flow ratio of 11.90, Enbridge looks attractive at current levels.

RBC Capital’s Robert Kwan remains bullish and reiterated a buy rating on Enbridge with a price target of $49.76, indicating a 20.71% upside.

Final Thoughts

Both Suncor and Enbridge have benefited from higher oil prices over the past few years. These stocks look attractive at current levels and it would behoove investors to keep these names on their radar.

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