Cenovus Energy Inc (TSX:CVE)(NYSE:CVE) normally follows a pretty similar path to the price of oil. Year to date, Cenovus is up around 60% and has outperformed the S&P 500, which is up a more modest 14% during the same period.
And now with the inclusion of Husky Energy into its operations, Cenovus' footprint in the oil sands has gotten even bigger. The company formally completed the transaction in early January and its most recent earnings results were the first to include Husky. And with $1.1 billion in adjusted funds flow, investors are already seeing a big impact as a year ago that figure was a negative $154 million.
Cash from operating activities was $228 million during the quarter, an 82% improvement from the prior-year period. Total upstream production was 59% higher and downstream throughput more than doubled.
Cenovus has been delivering some phenomenal results thus far and with some analysts projecting the price of oil to soar on high demand this year, the oil and gas giant could be poised for a strong performance in 2021. Several analysts boosted their price targets for the company this month, with more than one projecting the stock's price to rise to at least $16, which would translate into a potential return of more than 30%.
The stock currently trades at a forward price-to-earnings multiple of 15, which is cheaper than the 18 times future earnings that investors are paying for Exxon Mobil (NYSE:XOM). If you're expecting a busy travel season ahead and oil prices to continue rising, Cenovus could be an underrated buy right now as it may not be done rising in value.
