The Canadian energy stocks on our list look appealing on a price-to-cash-flow basis
SmallCapPower | January 31, 2022: With the WTI oil price reaching $80 per barrel, many oil and gas companies have been flushed with cash. Today we’ve uncovered three Canadian energy stocks with price to cash flow ratios less than 7. The price-to-cash flow (P/CF) ratio is multiple that investors use to measure the value of a stock’s price relative to its operating cash flow per share, adding back non-cash expenses such as depreciation. The ratio is commonly used to value companies with large non-cash expenses, such as depreciation, that can distort net income.
*Share price data and other metrics as of January 28, 2022
Parex Resources Inc. (TSX:PXT) – $25.69
Oil and Gas
Parex Resources is a Calgary based mid-sized energy company producing 49,000 barrels per day that focuses on sustainable, profitable, conventional oil and gas production. PXT holds interests in onshore exploration and production blocks totaling approximately 2.3 million gross acres. Parex boasts a 61% gross margin and is committed to sustainably grow reserves, production, and cash flow. Parex has grown its production by 50% since 2017, and is led by an experienced management team that has increased cash flow per share by 350% over the past five years.
- Market Cap: $3,161.1M
- 7-Day Return: +8.7%
- 30-Day Return: +16.7%
- 30-Day Average Trading Volume: 543,473
- Price to Cash Flow: 5.8x
Canadian Natural Resources Ltd. (TSX:CNQ) – $65.26
Oil and Gas
Canadian Natural Resources is one of the largest oil and natural gas producers in western Canada, supplemented by operations in the North Sea and offshore Africa. The Company’s portfolio includes light and medium oil, heavy oil, bitumen, synthetic oil, natural gas liquids, and natural gas. Production averaged 1.16 million barrels of oil equivalent per day in 2020, and the Company estimates that it holds over 11.5 billion boe of proven and probable crude oil and natural gas reserves. Oil and natural gas prices are up 60% and 55% from a year ago, which has increased CNQ cash flows that were up 200% in 2021. CNQ also increased its dividend by 25% in fiscal year 2021, the 22nd annual dividend increase.
- Market Cap: $60.3B
- 7-Day Return: +1.6%
- 30-Day Return: +18.8%
- 30-Day Average Trading Volume: 5,220,069
- Price to Cash Flow: 6.9x
ARC Resources Ltd. (TSX:ARX) – $13.22
Oil and Gas
ARC Resources is an independent energy company engaged in the acquisition, exploration, development, and production of conventional oil and natural gas in Western Canada. The Company produces light, medium, and heavy crude, condensate, natural gas liquids, and natural gas. Production averaged 163.6 thousand barrels of oil equivalent per day in 2020, and the Company estimates that it holds approximately 879 million boe of proven and probable crude oil and natural gas reserves. ARC announced a $0.10/share dividend increase and management commented that the increase reflect an increase in the Company’s profitability and cash flow.
- Market Cap: $9,888.3M
- 7-Day Return: +8.4%
- 30-Day Return: +18.3%
- 30-Day Average Trading Volume: 3,644,662
- Price to Cash Flow: 4.5x
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