Oil costs have fallen greater than 20% within the final 12 months. This fall has been pushed by oversupply fears and considerations relating to oil demand out of the US. Accordingly, Canadian power corporations like Canadian Pure Assets Ltd. (TSX:CNQ) have seen their share costs fall as nicely. In reality, Canadian Pure’s inventory is down greater than 10% within the final 12 months.
However what if oil costs rebound? What would that imply for Canadian Pure Assets’ inventory?
Oil costs in 2025 and past
The principle cause for the oversupply fears comes from fears that OPEC+ might authorize an output hike of as much as 137,000 barrels per day (bpd) or extra. This isn’t an insignificant quantity; subsequently, oil costs have been beneath stress.
It’s true that international inventories are rising and the oversupply within the oil market has been constructing. However the truth is that provide from OPEC+ has been steadily growing as demand has been stronger than anticipated in 2025.
However looking forward to the 12 months 2026 and past, there are some catalysts that might ship oil costs increased, comparable to rising geopolitical dangers or diminished Russian exports. In reality, the US is pressuring the world to cease importing crude oil from Russia. This is able to ship oil costs skyrocketing, as Russia remains to be a vital provider of crude oil to locations like India.
On this situation, Canadian oil corporations like Canadian Pure Assets would doubtless see a pointy rise of their share costs.
Canadian Pure: A extremely worthwhile power firm
Canadian Pure Assets has seen its inventory steadily rise over the past 5 years. Throughout this time, the corporate’s income greater than doubled, and its working money circulate elevated 184% to $13.4 billion in 2024.
Right this moment, Canadian Pure continues to generate sturdy returns from its very profitable asset base. This asset base has a low decline price, which suggests its oil and gasoline reserves have an extended life (33 years) and require minimal capital funding. This interprets right into a enterprise with sturdy and predictable returns.
Within the first half of 2025, the corporate’s working money circulate elevated 6.4% to $7.4 billion. Additionally, margins and returns proceed to be sturdy and higher than these of its peer group. Canadian Pure’s return on fairness presently stands at 20% and its revenue margin is a really wholesome 22%.
Dividend historical past
Canadian Pure is particular in its business for its stage of profitability and shareholder returns generated. For instance, the corporate has paid dividends for 25 consecutive years. Additionally, throughout this time interval, the dividend has elevated at a compound annual progress price (CAGR) of 21%.
If oil costs rise, Canadian Pure inventory will most undoubtedly see upside. And in the event that they don’t rise, nicely, Canadian Pure is extraordinarily well-positioned with its world class asset base.
Backside line
Canadian Pure Assets inventory is presently buying and selling at a mere six instances money circulate and a couple of.1 instances ebook worth. Additionally, its dividend yield is 5.3%. For my part, this inventory is the inventory to personal. If oil costs rise, it can additionally rise, but when oil costs fall, it is not going to fall as a lot as among the different Canadian power corporations.
