The TSX as we speak is rising increased and better. And it’s fairly fascinating, contemplating over the past yr, we’ve seen the S&P 500 rise to all-time highs solely to shrink.

Whereas the market is, in fact, a fickle beast, it may come right down to the TSX as we speak merely providing extra worth. Mix that with the expectation of decrease rates of interest, falling inflation, and a few sturdy financial progress, then Canada is trying like a great possibility!

But there may be one space of the market that’s doing properly, comparatively talking. And but, it’s one I’m not touching with a 60-foot pole.

Vitality

The vitality sector, particularly oil and fuel, has been doing fairly properly in latest months when it comes to Canadian corporations. This comes right down to a number of elements. First off, there proceed to be provide constraints. Since 2014, there was a major lower in funding in new oil and fuel exploration and manufacturing. This had led to a state of affairs the place manufacturing can not sustain with demand.

Moreover, there proceed to be geopolitical points in nations that produce oil. Whether or not it’s Russia or the Center East, these areas proceed to trigger points that disrupt provide and trigger costs to rise.

What does this must do with Canada? Canada is among the largest producers of oil and fuel on the planet. The latest surge in oil costs has, subsequently, given the vitality market a significant enhance and the TSX as properly, given its massive weight within the index.

Why ought to consumers beware?

The identical causes that occurred earlier than are nonetheless causes to beware. First off, vitality shares proceed to be extremely risky investments, influenced by geopolitical stress, regulatory modifications, and fluctuations in commodity costs. Ought to there be peace in a single nation and provide rise as soon as extra, this might imply there are fewer manufacturing points, which might result in much less demand from Canadian corporations.

Moreover, whereas there has but to be a significant shift over to scrub vitality manufacturing, even Canadian vitality corporations in oil and fuel acknowledge it’s coming. This has led many long-term buyers to rethink their funding in oil and fuel shares.

And they might be proper to. Buyers ought to think about the long-term viability of conventional vitality corporations in a panorama that’s now altering and shifting. Offering as a substitute clear vitality choices that will likely be round for the longer term, whereas oil and fuel corporations may fall away.

Keep away from This TSX inventory however think about another choice

Given all this, regardless of its rising share worth, I might nonetheless keep away from vitality inventory Suncor Vitality (TSX:SU). Shares of Suncor inventory are up 24% within the final yr alone. In the meantime, they’ve jumped over 13% within the final month as of writing. And this simply goes to indicate that Suncor inventory stays closely influenced by oil and fuel costs moderately than its backside line.

To be honest, Suncor inventory has come a good distance when it comes to enhancing its backside line. But even nonetheless, Suncor inventory has taken on important debt to finance its capital-intensive tasks and operations. Excessive ranges of debt can enhance the corporate’s monetary danger and curiosity expense, notably in periods of financial downturns or low oil costs — one thing it’s seen prior to now.

One to think about on this case could be Brookfield Renewable Companions (TSX:BEP.UN). BEP inventory now seems to be closely precious given its share worth, but in addition its numerous choices. Whether or not it’s nuclear energy or wind farms, it operates in all of them. It’s also serving to nations change into much less depending on outdoors sources for energy, as a substitute creating their very own means.

What’s extra, it provides a 6.14% dividend yield in comparison with Suncor inventory’s 4.15% as of writing. So, general, in case you’re on the lookout for worth within the vitality sector, BEP inventory seems to be like a much better long-term purchase over Suncor inventory as we speak.