Good Place. Good Things. Good Time.

Top Oil Stock to Buy for Winter 2021

Top Oil Stock to Buy for Winter 2021

Energy demand is already hitting record highs. As the economy reopens, pent-up demand for travel is being unleashed while supply struggles to catch up. Unsurprisingly, a barrel of crude oil now trades at US$69.8, pushing oil stocks higher. Now, as we enter winter, this momentum in oil stocks could continue. 

Here’s how you can bet on this medium-term trend in global energy demand. 

Top oil stock

Inter Pipeline (TSX: IPL) is one of the best oil stocks on the market right now. That’s because it’s an infrastructure play, rather than a producer, which makes it less volatile. 

The stock is up by more than 60% year to date. The rally has come at the back of major announcements that have continued to strengthen the company’s sentiments in the market.

Solid second-quarter results affirm the company’s core business which appears to be in a phase of growth amid the ongoing recovery in the energy industry. Inter Pipeline shares climbed after the company announced a 30% revenue increase to $524.4 million as net profit more than doubled.

However, chatter about Inter Pipeline being an acquisition target appears to be the primary driver of the rally right now. Pembina Pipeline was the first to table a takeover bid before withdrawing. Brookfield Infrastructure has since upped the game, having tabled a $16 billion bid, nearly double the $8.3 billion that Pembina offered. While Brookfield already owns a significant stake in the company, this bid would allow it to acquire the rest of the company that it doesn’t currently own. 

The bidding war is pushing the stock higher but it’s still trading below the offer price. Even if IPL accepts Brookfield’s current offer, the stock price could double. 

Dividend and valuation

Along, Inter pipeline boasts of a solid 2.4% dividend yield, which provides an opportunity to generate some passive income on the side, waiting to see if it will be acquired. However, the company’s dividend yield lags behind other oil stocks that offer up to 6.6%b in dividend yields. 

The proposed acquisition presents an opportunity to generate some returns going by the premium that any takeover will result in. Additionally, Inter Pipeline is the cheapest option compared to others as it is trading at a price-to-earnings ratio of 17.

Bottom line

2021 has been a great year to bet on oil stocks and energy companies. The reopening unleashed pent-up demand while supplies of oil and gas dwindled. Oil stocks have more than recovered their losses from last year. As we enter winter, this trend could continue. 

While Inter Pipeline is exposed to all those factors, it also has an added X-factor: a potential acquisition. Institutional investors have already expressed interest in buying the company for twice it’s current value. That’s why this oil stock should be on the top of your watch list.

The post Top Oil Stock to Buy for Winter 2021 appeared first on The Motley Fool Canada.

This Tiny TSX Stock Could be Like Buying Tesla in 2001

Our team of diligent analysts at Motley Fool Stock Advisor Canada has identified one little-known public company founded right here in Canada that’s at the cutting-edge of the space industry and recently completed a transformational acquisition, all while making a handsome profit in the process!

The best part is that in a market where many stocks are selling at all-time-highs, this stock is trading at what looks like a VERY reasonable valuation… for now.

Click here to learn more about our #1 Canadian Stock for the New-Age Space Race

More reading

  • Maximizing Shareholder Value at an Iconic Canadian Energy Company
  • Canada’s Top Pipeline Stock Should Continue Outperforming
  • Got $300? Buy Canada’s Top Infrastructure Stock Today

Fool contributor Vishesh Raisinghani has no position in any of the stocks mentioned. The Motley Fool recommends Brookfield Infra Partners LP Units, Brookfield Infrastructure Partners, and PEMBINA PIPELINE CORPORATION.

Search more articles here: Top Oil Stock to Buy for Winter 2021

Read original article here: Top Oil Stock to Buy for Winter 2021



Disclaimers and Denial of responsibility..!

Denial of responsibility! TheTopMag.com is an automatic aggregator of all media around the world. In each content, the hyperlink to the primary source is specified. All trademarks belong to their rightful owners, all materials to their authors. If you are the owner of the content and do not want us to publish your materials, please contact us by email – jamesonline999@gmail.com . The content will be deleted within 72 hours.
You might also like
Leave A Reply

Your email address will not be published.

This site uses Akismet to reduce spam. Learn how your comment data is processed.