The threat of increasing competition is real, but the task ahead for the US is enormous. Canadian producers are keeping a close eye on the price of a barrel, an ongoing headwind. Meanwhile, a midcap stock focused on service intensity entered 2026 with significant tailwinds.
Strong buy
Market analysts recommend a “strong buy” for CEU energy solutions (TSX:CEU). CEU is trading at $13.77 per share, after rising nearly 55% in the past six months. The 2024 TSX30 winner (fourth place) has rewarded investors with a substantial return of 430.22% over the past three years.
The $2.88 billion company provides technology-driven products to help exploration and production companies drill more efficiently. In addition, the specialized chemical solutions it provides for the entire oil and gas life cycle, including drilling fluids, are suitable for various geological formations and drilling methods.
In terms of service intensity, oil and gas companies require more chemicals and fluids to drill aggressively and deeper, regardless of commodity price fluctuations. To transport and transport its products, CES Energy owns and operates an extensive fleet of tankers, trucks and trailers.
CES has state-of-the-art research and development facilities, including satellite laboratories, that provide routine analytical services in service areas throughout North America. These satellite laboratories are equipped with essential instruments and certain specialized equipment depending on the formation requirements.
According to management, the fully integrated production capacity of world-class base chemicals is a competitive advantage. Increasing demand for drilling chemicals is a growth driver.
Financial performance
CES Energy is well-positioned because today’s high level of service intensity requires complex drilling fluids and chemical production technology. In the third quarter (Q3) of 2025, revenue increased 3% year-over-year to a record $623.2 million. However, due to higher depreciation costs, net income fell 13% to $405 million compared to the third quarter of 2024.
The company notes that economic uncertainty and ongoing global conflicts have affected near-term energy supply and demand dynamics. Fortunately, energy demand remains resilient, while industry fundamentals support critical oil and natural gas drilling and production activities.
Finally, the asset-light business model generates significant free cash flow at all stages of the cycle.
Growth plus income
Large capitalization stocks Enbridge, Canadian natural resourcesAnd Suncor Energy are solid investment options and generous dividend payers, but none of them can match the momentum of CES Energy Solutions. The company thrives on the intensity of service, not oil prices. From all indications, it is likely to outperform the energy giants by 2026.
The top tier mid-cap stocks are ideal for income and growth investing. If you had invested $7,000 in CES three years ago, your money would be worth $36,790 today. In addition to the potential for huge capital gains, potential investors can take advantage of the modest but safe 1.23% dividend (19.9% payout ratio).
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