This Canadian energy sector is one I have been bearish on in the past, and my view has not changed. That said, there are always pockets of value in any market.
In this article, I'm going to discuss why I think Tourmaline Oil (TSX:TOU) is one of the few producers in the Canadian energy sector I believe could rally in the coming quarters, should commodity prices improve. The company offers investors a decent dividend yield, making this a great dividend play today.
Tourmaline has one of the best balance sheets of its peers in the natural gas/liquids production space in Canada. The company's debt-to-equity ratio is favorable, due in part to the company’s focus on reducing debt and gaining efficiencies and improved unit economics.
Tourmaline has one of the best management teams in the sector and has done a great job of slimming down its operations and improving its balance sheet prior to this pandemic, putting Tourmaline is in a better position to handle the economic shock from the coronavirus pandemic.
Like its peers, Tourmaline is sensitive to commodity prices, and this recent volatility in commodity markets has been bearish for those who have invested in a sector in recent years.
Should additional supply curtailments push gas and condensate prices higher, Tourmaline could be a beneficiary. That said, capital inflow into the sector are likely to remain muted. However, for patient investors looking for a decent yield while waiting for an energy recovery, Tourmaline is a good choice at these levels.
Invest wisely, my friends.
