By Dale Roberts, Cutthecrapinvesting

Special to the Financial Independence Hub

The Canadian energy sector has been beaten up. Foreign investors have given up and so have many Canadian investors. Where there is incredible pessimism there can be incredible rewards. But there is certainly no guarantee that the pessimism for the Canadian energy patch is not deserved. That said, it is also certainly possible that the pessimism has jumped the shark. There may be incredible value in the energy sector for Canadian investors.

Off the top I am guilty of previously piling on with the pessimism. For Million Dollar Journey I had penned on Canadian energy stocks and their dividends.

The Canadian energy sector ETFs fell by some 70% in the stock market correction of March and into April. We have seen some slight recovery as the North American and Global economic recovery takes shape.

The need for oil and gas is not going away

While I am certainly a fan of the global move to green energy solutions, the shift will take some time. Perhaps it will take decades. And even during a robust transition to renewable energy, oil and gas will continue to play a leading role. We need natural gas to heat our homes and power our economy. And while the shift to electric vehicles attracts all of the headlines and much of the attention of investors, traditional gas powered vehicle sales will continue to dominate. We will need oil for various forms of transportation.

From the IEA …

Sales of electric cars topped 2.1 million globally in 2019, surpassing 2018 – already a record year – to boost the stock to 7.2 million electric cars. Electric cars, which accounted for 2.6% of global car sales and about 1% of global car stock in 2019, registered a 40% year-on-year increase.

It’s certainly a promising trend.

From that IEA report …

The Sustainable Development Scenario incorporates the targets of the EV30@30 Campaign to collectively reach a 30% market share for electric vehicles in all modes except two-wheelers by 2030.

And all of the above takes place as overall demand for vehicles increases. The need for oil will remain with us for quite some time under most projections. Oil demand will be driven by airlines and other industrial use as well.

We’ll need to move that oil and gas

Let’s start with the pipelines that move the oil and gas around North America. The two leaders are Enbridge and TP Energy (formerly TransCanada Pipelines). These two stocks are starting to get the attention of analysts and writers. Full disclosure: I own these two companies in my concentrated Canadian wide moat portfolio. Continue Reading…