Top Canadian Natural Gas Stocks To Buy in March 2025

ByDan Kent Published On:

Key takeaways

Rising Global Demand for LNG: With countries seeking cleaner energy alternatives, Canadian natural gas producers like Tourmaline, Ovintiv, and ARC Resources are well-positioned to benefit from increasing LNG exports.

Strong Cash Flow and Shareholder Returns: These companies are generating significant free cash flow, allowing them to pay dividends, repurchase shares, and invest in future growth.

Pipeline and Regulatory Challenges Remain: While demand for natural gas is growing, infrastructure constraints and government policies will continue to impact how efficiently Canadian producers can access global markets.

3 stocks I like better than the ones on this list.

Most investors associate Canadian stocks with either financial, material, or oil and gas sectors.

That is because if you’re looking to buy stocks in Canada the vast majority of our index, the Toronto Stock Exchange, is full of these types of companies.

It’s also why our index tends to underperform our US counterparts. The vast majority of these companies are either in mature, slow-growth sectors or are very cyclical, resulting in inconsistent returns and price volatility.

In this article, I’m going to dive into a few options that are without question cyclical but are also some of the strongest companies in the oil and gas sector today, that being 3 key natural gas players here in Canada.

But first, why natural gas?

It is important to understand that although natural gas is indeed a hydrocarbon and gets lumped in with other fossil fuels, it is also the cleanest-burning hydrocarbon.

The gas is extremely versatile, able to be shipped globally to energy-starved countries, and it is also very abundant, making for easy extraction and thus affordability.

For the most part, we utilize natural gas for generating both heat and electricity, with the vast majority of the global population using natural gas on a daily basis. It is important to note that even though it is the cleanest hydrocarbon it is certainly not as clean as renewables, nor is it a form of renewable energy.

Although commodities like crude oil are being targeted aggressively by countries whose goal is to reach net zero, there is likely a much longer timeline when it comes to natural gas and its use in our everyday lives. Investing in the Canadian energy industry is certainly a way to benefit from this.

The top Canadian natural gas stocks to buy today

Canada’s largest natural gas producer

Tourmaline Oil (TSE:TOU)

Tourmaline Oil is the country’s leading natural gas producer, with extensive operations in Alberta and British Columbia. Despite its name, Tourmaline is primarily focused on natural gas and liquids-rich gas production. The company is a major supplier to both domestic markets and international LNG exports, benefiting from rising demand for cleaner energy sources. Tourmaline is also known for its strong balance sheet and commitment to shareholder returns, including dividends and share buybacks.

P/E: 15.7

5 Yr Revenue Growth: 23.6%

5 Yr Earnings Growth: 27.7%

5 Yr Dividend Growth: 23.2%

Yield: 1.9%

  • Largest natural gas producer in Canada, offering scale and efficiency.
  • Benefiting from rising global LNG demand as Canada ramps up exports.
  • Low-cost operations provide strong margins, even during price fluctuations.
  • Attractive dividend payer with additional special dividends based on cash flow.
  • Strong balance sheet and disciplined capital allocation support long-term growth.
  • Industry leader in emissions reduction and sustainable energy practices.
  • LNG Export Growth: Canada’s growing LNG infrastructure is opening up international markets for Tourmaline.
  • Natural Gas Price Fluctuations: Tourmaline’s profitability is tied to global and North American gas prices.
  • Shareholder Returns: The company has been increasing dividends and share buybacks, rewarding investors.
  • Regulatory Environment: Government policies on emissions and pipeline approvals impact Tourmaline’s operations.
  • Commodity Price Volatility: Fluctuating gas prices can impact revenue and profitability.
  • Pipeline Capacity Constraints: Limited infrastructure can affect the ability to transport gas to key markets.
  • Regulatory Challenges: Stricter environmental policies could increase costs.
  • Global Competition: International LNG suppliers may influence pricing and market access.

Diversified oil and natural gas producer with strong U.S. presence

Ovintiv (TSE:OVV)

Ovintiv is a major North American oil and gas producer with operations in Canada and the U.S., including key shale formations like the Montney (Canada) and Permian (U.S.). The company focuses on low-cost, high-efficiency natural gas production, making it one of the most competitive players in the space. Ovintiv’s diversified asset base allows it to balance exposure between oil and gas markets, providing resilience during commodity price swings.

P/E: 6.2

5 Yr Revenue Growth: 13.8%

5 Yr Earnings Growth: 8.1%

5 Yr Dividend Growth: 31.9%

Yield: 2.6%

  • Strong presence in both Canadian and U.S. natural gas markets.
  • Low-cost production strategy ensures profitability, even in volatile markets.
  • Exposure to multiple basins reduces risk and enhances growth potential.
  • Focus on operational efficiency and capital discipline strengthens financial performance.
  • Strong cash flow generation supports debt reduction and shareholder returns.
  • Increasing exposure to LNG export growth, particularly in North America.
  • U.S. and Canadian Market Performance: Ovintiv benefits from both regions, balancing risks and opportunities.
  • LNG Export Potential: U.S. LNG growth and Canada’s emerging LNG market are key drivers.
  • Debt Reduction Strategy: Ovintiv is focused on strengthening its balance sheet to enhance profitability.
  • Operational Efficiency: Continued cost-cutting and innovation are improving margins.
  • Commodity Price Sensitivity: Exposure to oil and gas price swings affects profitability.
  • Regulatory Uncertainty: Policy changes in both Canada and the U.S. could impact operations.
  • Pipeline and Export Challenges: Limited transportation infrastructure can affect market access.
  • Competitor Pressure: Competing with larger U.S. shale producers may impact growth potential.

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Leading Montney natural gas and liquids producer

ARC Resources (TSE:ARX)

ARC Resources is a major player in Canada’s Montney region, one of North America’s richest natural gas basins. The company focuses on producing natural gas and natural gas liquids (NGLs), supplying both domestic and global markets. ARC is known for its disciplined capital approach, strong free cash flow, and commitment to returning capital to shareholders through dividends and buybacks.

P/E: 12.6

5 Yr Revenue Growth: 33.4%

5 Yr Earnings Growth: 34.2%

5 Yr Dividend Growth: 1.9%

Yield: 2.6%

  • Strong presence in the Montney, a highly productive and low-cost gas region.
  • Balanced production of natural gas and high-value NGLs enhances profitability.
  • Increasing exposure to global LNG markets through infrastructure investments.
  • Focused on capital efficiency and maintaining a strong balance sheet.
  • Regular dividends and share repurchases provide shareholder value.
  • Lower emissions intensity than many peers, improving its ESG standing.
  • LNG Expansion: ARC’s ability to connect to global LNG markets will drive long-term growth.
  • Natural Gas Liquids (NGL) Demand: Rising demand for NGLs in petrochemical industries supports prices.
  • Cost Efficiency: ARC’s ability to maintain low operating costs enhances its competitiveness.
  • Shareholder Returns: Dividend increases and buybacks reflect the company’s financial strength.
  • Commodity Price Volatility: Gas and NGL prices are subject to market fluctuations.
  • Pipeline Constraints: Infrastructure limitations could impact ARC’s ability to expand exports.
  • Regulatory Risks: Environmental policies may increase operating costs.
  • Production Declines: Maintaining output requires continuous investment in drilling and development.

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Is there a Canadian natural gas ETF?

As of right now, there is a natural gas ETF here in Canada. However, with assets under management of only $17M, it is not very popular. That ETF is the Horizons Natural Gas ETF (TSE:HUN).

The fund seeks to replicate the performance of the Solactive Natural Gas Winter MD Rolling Futures Index. It doesn’t contain natural gas exploration and producers. It is more of a option if you seek to track the actual price of natural gas.

If you’re looking for a fund that holds actual natural gas producers, you may need to look to the United States for natural gas funds. For the purposes of this article, I tried to stick to pure-play Canadian natural gas companies.

Although many oil sand producers like Suncor Energy, Cenovus Energy, Canadian Natural Resources Limited, and Imperial Oil have natural gas production and storage as integrated oil and gas producers, this article was specifically reserved for companies whose primary revenue generation method is natural gas.

I also skipped over pipeline and midstream companies like TC Energy and Enbridge.

Overall, all of these Canadian natural gas stocks provide solid exposure

I think the tale of these three stocks comes down primarily to valuation. Do you take what I feel is the best-in-class natural gas stock in the country in Tourmaline at a more expensive valuation, or do you take a flyer out on a company that is currently undergoing some changes, but is expected to have a large rebound over the next few years in Ovintiv? Or alternatively, do you look at the smaller company in ARC?

Ultimately, the choice is up to you and boils down to individual risk tolerance.

However, make no mistake about it, all of these companies will be heavily dependent on the price of natural gas. If the price of the commodity rises, expect companies like Tourmaline, ARC, and Ovintiv to rise at an even faster rate. This is just the nature of energy stocks.

However, if natural gas prices stall out or head downwards, it’s very likely these companies and the natural gas industry continue to underperform as they did for the better part of a decade before the current commodity boom.

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