Oil prices have bounced back from a deep slump, prompting a surge in the share prices of Canadian energy giants Suncor Energy (TSX:SU) and Cenovus Energy (TSX:CVE). For investors who missed the recent rebound, the key questions remain: Are SU or CVE still undervalued, and should they be included in a TFSA or RRSP portfolio focused on energy stocks?
Heading into 2025, market jitters arose from Trump’s tariff war, sparking recession fears and concerns about demand from the two largest oil-consuming nations—China and the US. Despite these uncertainties and increased supply from OPEC putting pressure on prices, Suncor’s share price has shown resilience, trading around CAD 49.70. Although this price is higher than the CAD 45 seen in April, it remains below its 12-month high of CAD 58.
Under the helm of its current CEO, Suncor launched a transformational plan two years ago that has yielded promising results. The company has successfully cut costs, ramped up production, and improved its safety record. Its integrated business model—encompassing production, refining, and retail—helps cushion the profit margins of its upstream assets. These improvements are reflected in its Q1 2025 performance:
With gasoline prices falling and the trend of Canadians vacationing domestically this summer, Suncor’s Petro-Canada retail sites are poised for a robust seasonal boost. The company also increased its dividend by roughly 5% for 2025, yielding about 4.6%, while using excess cash flow to repurchase shares.
Cenovus Energy is a fully integrated energy company active in oil, natural gas, and natural gas liquids production, along with refining. Its Q1 2025 performance was solid:
Looking ahead, several capital projects—such as the West White Rose offshore project, now 90% complete—are expected to boost output once they come online in Q2 2026. Recently, Cenovus raised its dividend by 11%, achieving a yield of around 4.5%. Trading near CAD 17.80, its stock has fluctuated between a 12-month low of CAD 14.50 and a high of CAD 28. However, recent evacuations of some Alberta staff due to wildfire threats could impact Q2 production.
Both Suncor and Cenovus offer attractive dividend yields that are likely to continue growing. Suncor’s strengths lie in its diversified operations, retail presence, and robust performance across its three major business units, which provide added safety and stability. In contrast, Cenovus, though currently trading at lower levels and possibly in oversold territory, could present stronger upward momentum if oil prices continue to rebound.
For investors with a bullish view on oil prices, a balanced allocation to both Canadian energy stocks might be a smart move.
