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 Cenovus Energy Inc. (NYSE:CVE) 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 fleet of oil tankers at sea, representing the global reach of a crude oil supplier.
Cenovus Energy Inc. (NYSE:CVE)
Average Upside Potential: 37.8%
Number of Hedge Fund Holders: 48
Cenovus Energy Inc. (NYSE:CVE) is engaged in developing, producing, refining, transporting, and marketing crude oil, natural gas, and refined petroleum products in Canada and internationally. Analyst Lloyd Byrne from Jefferies maintained a “Buy” rating on the company’s stock. The rating is backed by several strategic developments at Cenovus Energy Inc. (NYSE:CVE). Its production guidance for 2025 aligns with market anticipations, and even though the capex is marginally above predictions, it is anticipated to decline over time. The company released its 2025 corporate guidance, including capital investment of $4.6 billion – $5.0 billion, delivering upstream production of 805,000 barrels of oil equivalent per day (BOE/d) – 845,000 BOE/d and downstream crude unit utilization of 90% to 95%.
Cenovus Energy Inc. (NYSE:CVE) is entering the final year of a 3-year investment cycle, which is expected to fuel planned production growth of 150,000 BOE/d by 2028 end and allow significant expansion of free funds flow. The company plans to focus on controlling costs, improving the profitability of its strategic downstream business, and optimizing the advantaged portfolio to deliver value for shareholders. Cenovus Energy Inc. (NYSE:CVE)’s disciplined capital plan and healthy emphasis on cost control can support continued returns to shareholders of 100% of excess free funds flow over time while, at the same time, maintaining net debt near $4.0 billion.
Overall, CVE ranks 2nd on our list of most promising energy stocks according to analysts. While we acknowledge the potential of CVE 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 CVE 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.
