Motley's take (TSX:SU) stock fell 18% from its June 2022 high. Is it a stock to buy the dip? Oil is a decelerating industry. It is becoming difficult to drill oil wells due to environmental concerns. The overall investment in oil has decreased and shifted to renewable energy. The Russia-Ukraine war and the Israel–Hamas war have accelerated the efforts towards energy security and alternative sources of energy.
Suncor’s stock price peaked at over $52 in June 2022 as the oil price reached US$125/barrel from the supply shock. Such a high price is not sustainable as it curbs demand. The oil price is likely to be in the range of US$70-US$100/barrel, limiting the upside of Suncor, which produces oil at $35/barrel. The highest the stock can go is $46-$48, a 6-11% upside from the current price of around $43. However, there is a significant downside risk if the economy plunges into a recession. Hence, avoid investing in Suncor at its cyclical peak