We recently published a list of 12 Most Promising Energy Stocks According to Analysts. In this article, we are going to take a look at where Canadian Natural Resources Limited (NYSE:CNQ) stands against other most promising energy stocks according to analysts.
With the world pivoting towards cleaner energy sources and facing political uncertainties, 2025 can be a critical year for the broader energy sector. As per GlobalData’s Power Predictions 2025 report, numerous themes are expected to shape the global power landscape in 2025. These include geopolitical shifts influencing supply chains, developments in EVs, energy storage, hydrogen, and nuclear power. As per the Short-Term Energy Outlook released by the US Energy Information Administration, the generation in the US electric power sector is expected to increase by 2% in 2025 and by 1% in 2026, after rising 3% last year, driven by growth in renewable energy sources.
What Lies Ahead for the US Energy Sector?
As per AXA Investment Managers, the combination of increased demand and supply constraints resulted in a favourable backdrop for the broader US renewable energy sector. Furthermore, the lower cost and environmental benefits of renewable energy are some positive factors. Trump’s return to the White House kicked off with several executive orders. Apart from announcing a national energy emergency, he ordered the withdrawal from the Paris Agreement on climate change and rolled back the clean energy initiatives.
Despite such announcements, AXA Investment Managers expects the US clean energy sector to have potential investment opportunities, considering the increasing power demand. The US power demand growth remained weak between 2000 and 2020, averaging 1%. However, it is projected to increase from 2024 onwards. As per the investment management firm, a 2% – 3% increase in the growth rate per annum will be significant, reflecting a doubling or tripling of the historical rate. The overall US power demand can grow at a CAGR of 3.1% between 2020 and 2040, against 0.1% between 2010 and 2020. This higher demand will be supportive of the long-term trend, with potential investment opportunities, from power companies to the ones involved in the energy and equipment supply chain.
READ ALSO: 7 Best Stocks to Buy For Long-Term and 8 Cheap Jim Cramer Stocks to Invest In.
Trump’s Deregulation To Be a Critical Growth Factor
One of the President’s priorities revolves around reducing government bureaucracy and inefficiency. Notably, permitting new energy projects remained slow over the past few years because of understaffed government departments and burdensome environmental criteria, opines AXA Investment Managers. In an executive order on “unleashing American energy”, Donald Trump is focusing on reducing official rules and processes that seem unnecessary, and accelerating energy projects, constraining the remit of the NEPA (National Environmental Policy Act). Interestingly, most of the permit requirements stem from this act.
Overall, economics, growth and a continued climate of innovation and competition hint at the robust US power demand, which can also support the prospects of clean energy and its supply chains.
Our Methodology
To list the 12 Most Promising Energy Stocks According to Analysts, we used a screener to find companies catering to the energy sector. Next, we chose the ones that analysts see the most upside to. Finally, the stocks were arranged in ascending order of their average upside potential, as of February 12. We also mentioned the hedge fund sentiment around each stock, as of Q3 2024.
At Insider Monkey we are obsessed with the stocks that hedge funds pile into. The reason is simple: our research has shown that we can outperform the market by imitating the top stock picks of the best hedge funds. Our quarterly newsletter’s strategy selects 14 small-cap and large-cap stocks every quarter and has returned 275% since May 2014, beating its benchmark by 150 percentage points (see more details here).
A vast oil rig pumping crude oil during a sunset, emphasizing the company’s focus on oil & gas exploration and production.
Canadian Natural Resources Limited (NYSE:CNQ)
Average Upside Potential: 26.8%
Number of Hedge Fund Holders: 48
Canadian Natural Resources Limited (NYSE:CNQ) is a senior crude oil and natural gas production company, having continuing operations in its core areas located in Western Canada, the U.K. portion of the North Sea, and Offshore Africa. The company’s high quality, diversified asset base along with its flexible capital allocation strategy remains a significant competitive advantage. Canadian Natural Resources Limited (NYSE:CNQ)’s disciplined and focused approach allocates capital and focuses on optimizing the product mix based on the highest return projects, enhancing the shareholders’ value.
Its 2025 operating capital budget of ~$6 billion aims to provide value growth and robust returns on capital. Canadian Natural Resources Limited (NYSE:CNQ) targets annual average production in 2025 of between 1,510 MBOE/d and 1,555 MBOE/d, leading to production growth of ~170 MBOE/d or 12% over 2024 levels based on mid-point of corporate guidance. This corporate growth consists of the strategic acquisition of the AOSP and Duvernay assets completed in 2024. Michael Barth, CFA from Raymond James maintained a “Hold” rating on Canadian Natural Resources Limited (NYSE:CNQ)’s stock.
The company’s diversified production mix is balanced and is focused on consisting of ~47% light crude oil, NGLs, and Synthetic Crude Oil, 26% heavy crude oil, and 27% natural gas based on the mid-point of the corporate production guidance range.
Overall, CNQ ranks 9th on our list of most promising energy stocks according to analysts. While we acknowledge the potential of CNQ as an investment, our conviction lies in the belief that some deeply undervalued AI stocks hold greater promise for delivering higher returns, and doing so within a shorter time frame. If you are looking for a deeply undervalued AI stock that is more promising than CNQ but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
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Disclosure: None. This article is originally published at Insider Monkey.
