10 Most Undervalued Canadian Stocks to Buy According to Wall Street Analysts

5. Cenovus Energy Inc. (NYSE:CVE)

Forward P/E Ratio as of April 21: 11.57

Number of Hedge Fund Holders: 39

Average Upside Potential as of April 21: 51.75%

Cenovus Energy Inc. (NYSE:CVE) develops, produces, refines, transports, and markets crude oil, natural gas, and refined petroleum products. It develops and produces bitumen and heavy oil in northern Alberta and Saskatchewan. Its oil sand assets include Foster Creek, Christina Lake, and Sunrise projects, as well as Lloydminster thermal and conventional heavy oil assets.

The company’s Oil Sands segment contributes to its overall upstream performance. In 2024, the Oil Sands segment achieved a record production of 610,700 BOE per day, which was an increase of ~3% year-over-year. This was fueled by increased production at the Sunrise project and new annual production records at the Foster Creek and Lloydminster thermal assets within this segment. Notably, in Q4 2024, the Oil Sands segment reached a new quarterly production record of 629,000 BOE per day.

Cenovus Energy Inc. (NYSE:CVE) now anticipates continued growth from its Oil Sands assets. The company completed a major turnaround at Christina Lake in Q3 2024. The Foster Creek optimization project, which was 64% complete at the end of 2024 with first oil expected in early 2026 and full ramp-up in 2027, will also contribute to increased production from this segment.

L1 Long Short Fund stated the following regarding Cenovus Energy Inc. (NYSE:CVE) in its first quarter 2024 investor letter:

“Cenovus Energy Inc. (NYSE:CVE) (Long +20%) shares performed strongly as the WTI oil price increased 16% to ~US$83/bbl, while refining margins in the U.S. Midwest improved dramatically from a low base. During March, Cenovus’s 2024 investor day was well received, where its 5-year outlook for the business included growth in upstream production of around 150m bbl/d above the current 800m bbl/d and a material turnaround of its downstream refining business. Over the next five years, the company expects to generate C$32b of cumulative free cash flow based on a US$75/bbl WTI oil price, a highly attractive prospect given its current market cap of ~C$51b. Furthermore, it has committed to return 100% of excess cash flow back to investors once it reaches its C$4b net debt target (expected in 2024). Cenovus’s strong cash flow generation, combined with the long-life nature of its oil sands assets and its low cost of production, make it one of our preferred Energy exposures.”