This is a top Canadian energy play for investors to consider. Suncor Energy Inc. (NYSE: SU) operates as an integrated energy company. It primarily focuses on developing petroleum resource basins in Canada’s Athabasca oil sands; explores, acquires, develops, produces and markets crude oil and natural gas in Canada and internationally; transports and refines crude oil; markets petroleum and petrochemical products primarily in Canada; and markets third-party petroleum products.
The company reported so-so second-quarter results, but RBC stays positive on it as the firm sees new growth on the horizon. The report noted:
Our bullish stance towards Suncor Energy remains intact despite mixed second-quarter results. The company’s growth initiatives at Fort Hills and Hebron remain on-track, which should support rising free cash flow generation that we peg at $3.1 billion (before dividends) in 2018 (US$50 WTI). Suncor raised its common dividend by 10% with its 2016 year-end results—and is well positioned to do so again as its upstream growth continues
Suncor investors receive a 3.17% dividend. RBC has set its price target at $45, while the consensus target is $38.16. Shares closed trading Friday at $32.46.
This is another giant European energy giant, this one based in France. Total S.A. (NYSE: TOT) is a global integrated energy producer and provider, a leading international oil and gas company, and the world’s second-ranked solar energy operator with SunPower.
The company operates through three segments. The Upstream segment explores and produces oil and gas; ships, trades and markets natural gas, liquefied natural gas and liquefied petroleum gas (LPG); generates power; and mines and markets coal.
The Refining & Chemicals segment refines and produces petrochemicals and provides sealing, insulation, fluid transfer and transmission and transportation solutions, as well as offers chemical processes and services for electronics, surface finishing and semiconductor manufacturing. It is also involved in trading and shipping crude oil and petroleum products.
The Marketing & Services segment supplies and markets petroleum products, including automotive fuels, biofuels, home heating oil and heavy fuel oil, lubricants, asphalt, aviation fuel, additives and special fuels and special fluids through service stations for light vehicles and trucks.
The company reported solid results, and the analysts said this:
Total’s strong delivery now leaves it with the lowest gearing among the European integrateds, and in line with US peers. We expect incremental guidance upgrades at the company’s September 2017 capital markets day, which should be taken positively. That said, we believe investors are focused on companies removing dilutive scrip dividends, and peers appear to have much stronger rhetoric in this regard.
Investors receive a 4.42% dividend. The RBC price objective is $52. The consensus target is $50.58, and shares closed last Friday at $50.61.
These five companies all offer solid upside and total return potential for investors. Energy was the only sector in the S&P 500 in the first half that was down, and it may offer among the best potential upside going forward.