Which Canadian Stock to Buy for Long term?

In this article, we will discuss which Canadian stock to buy for long term.

Energy stocks have a reputation for volatility—moving sharply on the back of OPEC+ decisions, geopolitical tensions, or shifts in global demand. But within that volatility lies opportunity, especially for long-term investors who know where to look. While the answer to the question “Which Canadian Stock to Buy for Long term” depends on risk appetite, we believe that Baytex Energy (TSX:BTE) is one such opportunity today. Despite being down roughly 38% year to date, the company remains fundamentally strong and could be a hidden gem for those with a long-term investment horizon.

Overview: What Baytex Does

Headquartered in Calgary, Baytex is a mid-sized oil and gas producer with operations spanning the Western Canadian Sedimentary Basin and Eagle Ford in Texas. This geographic diversity gives it a healthy balance between conventional and shale oil assets. While it doesn’t have the size of some of its larger peers, Baytex has been quietly improving its business by lowering costs, enhancing production, and prioritizing shareholder returns.

The company’s Q1 2025 earnings, released on April 25, offered a glimpse into its solid operations. Revenue came in at $791.2 million, slightly ahead of the $775 million reported in Q1 2024. Net income was $70 million ($0.09 per share), a drop from $113.7 million the year before—but that decline was mainly due to foreign exchange and hedging losses, not issues in the core business. Importantly, Baytex generated $53 million in free cash flow, a key indicator of its ability to fund dividends, buybacks, or debt reduction.

Stable Operations and a Margin of Safety

Baytex produced 144,194 barrels of oil equivalent per day during the first quarter, marking a 2% year-over-year increase. Around 84% of output came from oil and natural gas liquids, which are more lucrative than dry natural gas. With a break-even oil price below US$50 per barrel, Baytex has plenty of cushion even in a down market—particularly with oil currently trading around US$80.

The company’s production economics are supported by disciplined capital management. Net debt was reduced to approximately $1.3 billion as of March 31, a notable improvement from over $2 billion just a few years ago. Baytex plans to continue reducing its leverage while returning 50% of excess free cash flow to shareholders via dividends and share buybacks—a strategy that rewards patient investors.

Why Baytex Is a Long-Term Bet

Baytex may not be a flashy name, but its long-term prospects are compelling. While the world gradually transitions toward cleaner energy, demand for oil isn’t going away anytime soon—especially for sectors like petrochemicals, aviation, freight, and heating. Baytex doesn’t need to dramatically expand to reward shareholders; it just needs to stay efficient, control costs, and maintain strong capital returns.

If it keeps executing on that plan, today’s depressed share price could prove to be a bargain in hindsight.

Final Thoughts: A Deeply Undervalued Stock

By now, the readers would have got the answer to the question “Which Canadian Stock to Buy for Long term?”

Naturally, investing in energy comes with its fair share of risks. Oil prices can decline sharply, policy shifts could introduce new headwinds, and Baytex’s U.S. exposure adds an element of currency volatility. But despite those risks, this is a well-managed, financially sound company trading at discounted valuations.

With a price-to-earnings ratio under 6 and a price-to-cash flow multiple around 2.8, Baytex looks deeply undervalued compared to industry peers. For long-term investors willing to embrace short-term noise, this could be one of the more compelling energy plays on the TSX today.