Cenovus -Energie (TSX: CVE) has risen 50% compared to the low that it hit during the tariff routes of April. Investors who have missed the rally wonder whether CVE shares are still undervalued and good to buy for exposure to energy in a self -driven tax -free savings account (TFSA) or registered pension saving plan (RRSP) portfolio.
Cenovus Energy stock price
Cenovus acts above $ 22 per share at the time of writing compared to $ 15 earlier this year. The stock rose by 8% in August. It reached a post-Pandemic peak of approximately $ 30 in June 2022.
Cenovus operates oil manden, conventional heavy oil, offshore oil and natural gas production activities. The company also has refineries.
In recent months, management has been busy positioning the company for long -term growth. In August, Cenovus announced a plan to buy Meg energy for $ 7.9 billion, including debts. The deal would be 75% cash payment and 25% in Cenovus shares. Analysts see the deal in general as a good fit, because the assets of Meg Energy Oil Sands are close to existing Cenovus activities. By 2028, Cenovus expects $ 150 million to realize annual synergies and $ 400 million a year in synergies from the deal.
Cenovus has just announced a transaction. The company sells its interest of 50% in WRB Refining to his partner, Phillips 66, for US $ 1.9 billion. Assets in the deal are the Wood River Refinery in Illinois and the Borger Refinery in Texas. The net refining transit capacity for Cenovus in the locations comes to 247,500 barrels per day. Cenovus said it will use the yield to reduce debts and buy back shares. The deal is expected to close in 2025. Investors responded positively to the deal.
Risks
Strathcona Resources, who defeated Cenovus in the bidding process for Meg, recently made another offer to try to undo the deal. This could force Cenovus to increase his bid, or the company could decide to walk away if it thinks the price is too high. The uncertainty can cause some volatility in the share price until there is clarity about the outcome.
The oil prices remain under pressure. West Texas Intermediate (WTI) sells for US $ 63 per barrel compared to US $ 80 last year. Analysts in broad lines expect that the oil price headwind will be confronted in 2026, because the rising range of large producers keeps the market in an excess position. The question of China and the United States, the two largest oil consumers, can weaken if rates and uncertainty about trade negotiations cause an economic decline.
The sale of the importance in the US refineries reduces the diversification of sales in Cenovus. Adding meg makes it more dependent on oil prices to determine income and profit. Refining activa can offer a nice hedge in times when oil prices are low. Lowering input costs for the refinery may be of higher margins when selling the end products.
Time to buy Cenovus?
Folatility in the short term must be expected, but Energy Bulls may want to nibble at this level and want to add pullbacks. The acquisition of meg energy must be a long-term positive for investors. Even without that deal, Cenovus has good growth prospects on its existing assets of the oil countries and the company has been able to reduce the company to enable the company to return surplus cash to shareholders by dividends and share purchasing. The current dividend yield is a decent 3.5%.
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