Amid global trade tensions and concerns over economic downturns, the Canadian TSX Index has faced significant fluctuations. However, this market turbulence has opened an opportunity for investors to consider acquiring assets at lower valuations. Investors are revisiting defensive and growth-oriented picks in the energy sector, with two Canadian energy stocks—pipeline leader Enbridge (TSX:ENB）and uranium giant Cameco (TSX:CCO)—gaining attention.
Since March, the escalation of trade disputes has intensified global stock market volatility. For instance, the S&P 500 has entered a technical correction phase after more than a year of stability. While systemic risks may continue to weigh on market sentiment, calm and focused investors are starting to look at quality assets that have been unfairly hit. Notably, a recent “constructive meeting” between Ontario Premier Doug Ford and U.S. President Donald Trump offered faint signs of easing trade tensions, potentially setting the stage for a recovery in energy stocks.
This article analyzes the investment value of Enbridge and Cameco during the current market correction from the perspectives of market position, risk resilience, and long-term growth potential.
As one of the largest energy infrastructure companies in North America, Enbridge focuses on key pipeline operations, which are relatively insulated from broader economic fluctuations. The company recently acquired U.S. natural gas utility assets, further improving income stability and supporting earnings growth this year. Although Enbridge’s stock price has pulled back by about 5% from its highs, it has still gained approximately 28% over the past year—a testament to its ability to perform well across market cycles.
Enbridge is also backed by an impressive dividend yield of 6.13%, highlighting its robust cash flow generation and resilience as a utility-like asset. Currently, the stock’s price-to-earnings (P/E) ratio stands at 26.2, indicating potential undervaluation. If the economic risks driven by trade tensions turn out to be milder than expected, the stock might have significant upside potential.
As one of the world’s top uranium producers, Cameco recently experienced a 30% drop from its peak but still posted a 12% gain over the past year. The volatility in Cameco’s stock stems primarily from fluctuations in uranium prices and changing market expectations for nuclear energy demand.
Fortunately, global energy transformation efforts have driven renewed interest in nuclear power as a low-carbon, baseload energy source. The European Union recently categorized nuclear energy as “green energy,” and the U.S. has intensified support for extending the lifespan of aging nuclear plants, all of which contribute to structurally higher uranium demand. On the supply side, geopolitical risks in major uranium-producing nations like Kazakhstan and years of underinvestment during uranium price depression may create a supply gap in the future.
If Cameco’s stock price continues to decline by 10-15% to its 52-week low (around CAD 50 per share), the risk-reward ratio will become significantly more compelling.
If the market further declines amid recession fears, Enbridge’s defensive attributes make it a priority. Meanwhile, Cameco is better suited for those with higher risk tolerance and an optimistic outlook on nuclear energy’s long-term growth prospects. Both stocks currently offer a margin of safety, but investors should select based on their portfolio’s risk tolerance and investment strategy.
