The second half of the year doesn’t have to be scary. Though the treacherous road could continue into late summer, one has to think that inflation will begin to wane as a result of the many disinflationary forces that could go into effect.
In any case, many intriguing high-yield stocks have become that much cheaper over the past few weeks. Despite lower prices, negative momentum, and a weaker macro outlook, many Wall Street analysts have maintained their “Strong Buy” analyst rating consensus.
Given idiosyncratic strengths in each business, I’d argue that such ratings are well-deserved, as analysts get busy lowering the bar on most other companies in the second half.
In this piece, we used TipRanks’ Comparison Tool to have a closer look at three high-yielders that Wall Street has yet to sour on.
Suncor Energy (SU)
Suncor Energy is a Canadian energy company that’s been on quite a rocky ride over the past few years. The company imploded when oil prices nosedived off a cliff back in 2020. Though the dividend was a victim of the oil price collapse, Suncor seems to be ready to make up for lost time now the tides are finally turned in its favor.
Unlike more conventional oil producers in America, Suncor is a major player in the Albertan oil sands. Western Canadian Select (WCS) oil tends to trade at a discount to West Texas Intermediate (WTI). Given high production costs and hefty emissions, energy firms with oil sands operations tend to trade at a discount to the peer group. In time, the advent of solvent-aided technologies can further enhance the underlying economics of operating in Canada’s oil sands, and slim the relative discount to conventional oil producers.
Looking ahead, I’d look for Suncor to continue making the most of the oil boom while it lasts. Even if oil is due for a recession-driven drop, the resilient integrated business should help the firm from enduring too painful of a slide.
At writing, Suncor stock trades at just south of 10.5 times trailing earnings. That’s incredibly cheap, given how much operating cash flow the firm is capable of generating over the…