All stocks related to oil and gas have done poorly this year. The lower energy demand due to the pandemic impacts weighed on oil and gas prices. Even integrated oil majors like Suncor did not get exempt from the downdraft. The stock is down 63% year to date.
An economic recovery resulting in normal energy usage will drive steady growth of energy demand. This will cause Suncor stock to trade much higher. Buffett is probably counting on that swing to the upside when energy prices recover.
Suncor is a diversified large-cap company that has staying power. Its financial position remains solid and is awarded an investment-grade S&P credit rating of BBB+. Currently, it also pays a 5.4% yield.
Analysts have an average 12-month price target of $29.40 on Suncor stock, which represents a whopping near-term upside potential of almost 88%.
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