What a year it’s been for shares of Whitecap Resources (TSX: WCP), which are up an astounding 55% year-to-date. There’s an explosive amount of momentum riding behind the $22 billion energy producer, which has now gained close to 137% since April of last year.
With another spectacular showing in the books after the firm revealed its second-quarter numbers, investors might be wondering if there’s still any value in adding to the name as the stock looks for a run to new all-time highs.
On the surface, Whitecap Resources might just appear to be another fast-rising oil and gas producer. With production growing as rapidly as it has been, the name definitely stands out as a growthier pick of the batch for the oil bulls seeking a bit more torque. Of course, the conflict in the Middle East and its impact on oil prices has been a rising tide for many ships in the energy scene.
And while time will tell where oil prices head next, I still think that Whitecap Resources stands out as one of the names that could continue to find a way higher as oil settles into a new range while demand for natural gas continues to face structural demand tailwinds, thanks in part to the ongoing AI data centre buildout.
Whitecap Resources posts another strong round of results
For Q2, the company had another record-breaking result. And it wasn’t just high oil prices that were to thank, although it was undoubtedly a major contributor. With strong operating results and free cash flow growth coming onto the high track, it feels like the growthy oil and gas play isn’t quite fully appreciated by everyday investors.
Indeed, growth stocks with smaller market caps tend to accompany greater risk, but unlike the junior players in tech, the growthy energy companies are actually generating real profits. And in the case of Whitecap Resources, serious earnings growth I believe warrants a much higher multiple than is currently being commanded, especially considering further room to cut costs and beef up free cash flow.
In short, Whitecap Resources showed that it’s more than just a firm in the right place at the right time. It’s a strong operator, and there’s still plenty of earnings growth left in the tank. With production on its way up and plenty more to look forward to, it’s my view that the fundamentals just keep getting better for a firm that’s already been one of the most notable winners in the Canadian energy patch.
Cheap, growthy and bountiful?
The cherry on top of the sundae had to be the increased production guidance. Even after a turbulent past couple of weeks (shares are down around 6% from recent highs), I’d much rather be a buyer than a seller at 15.5 times trailing price-to-earnings (P/E).
With a fairly low 0.84 beta and strong operators that can certainly keep the energy momentum play moving strong for years to come, I’m inclined to view the name as both a dividend, momentum, and value play. The 4% dividend yield is stellar, as are the growth prospects as we head into 2027.
