The TSX Composite Index is continuous to achieve new document highs in July 2025, having already surged by 9.6% year-to-date. However curiously, not each inventory is following that pattern. Some strong corporations from the power sector are nonetheless buying and selling effectively under their highs, giving buyers a uncommon likelihood to choose up long-term winners at discounted costs.
On this article, I’ll highlight one such undervalued Canadian power inventory that’s buying and selling at a heavy low cost and clarify why it could possibly be a prime inventory to purchase and maintain now.
A reduced power large displaying power underneath strain
That brings me to Cenovus Power (TSX:CVE), a inventory that I imagine deserves a more in-depth look proper now. This Calgary-based firm is a significant built-in oil and gasoline producer with operations unfold throughout Canada, the US, and Asia Pacific.
CVE inventory is at the moment buying and selling at $19.50 per share with a market cap of $35.3 billion. It additionally provides a quarterly dividend that interprets into an annualized yield of about 4.1%.
Regardless of sturdy long-term fundamentals, Cenovus shares have slipped 31% during the last 12 months, making it one of many few large-cap shares buying and selling at such a large low cost. Nonetheless, this dip doesn’t replicate the power in its operations or the enhancements it’s making underneath the hood.
Working momentum is selecting up
Whilst its inventory has disenchanted these days, Cenovus is continuous to showcase the power to ship constant upstream efficiency whereas pushing ahead with main growth tasks. Within the first quarter of 2025, the corporate’s manufacturing stood at 818,900 barrels of oil equal per day, reflecting a slight enchancment over the earlier quarter and shutting in on all-time highs. Its downstream phase additionally operated effectively, with a crude throughput of 665,400 barrels per day.
Whereas Cenovus posted a YoY (year-over-year) drop in its adjusted web revenue to $859 million for the primary quarter, the revenue determine surged greater than fourfold sequentially. The YoY decline was primarily because of decrease oil costs and deliberate upkeep, however working margins nonetheless got here in sturdy.
In the meantime, Cenovus Power’s income for the quarter rose 4% sequentially to $13.3 billion with the assistance of upper upstream gross sales volumes and a latest rebound in oil costs. Equally, its adjusted funds stream reached $2.2 billion within the newest quarter, which left Cenovus with practically $1 billion in free funds stream to reinvest or return to shareholders.
Targeted investments might drive long-term upside
One other key issue that makes Cenovus a very energetic inventory to purchase and maintain now’s its constant give attention to long-term development initiatives. The corporate is nearing completion on main tasks like Narrows Lake and West White Rose, each of that are anticipated to start out producing inside the subsequent 12 months. These are high-return developments that don’t require big ongoing capital.
Equally, its turnaround at Foster Creek is shifting ahead easily, with key tie-ins scheduled this 12 months. And after a brief wildfire-related disruption, operations at Christina Lake have additionally been totally restored. Total, its monetary flexibility and environment friendly execution might put Cenovus in a powerful place to learn much more if oil costs stay steady or rise from right here.
