The American company NextDecade specializes in the export of liquefied natural gas (LNG). It’s a small-cap company with a lot of ambitions and support from the largest funds and governments in creating cleaner energy sources. The company expects significant cash flow potential beyond the Rio Grande CCS project. This might not be a quick rise in the short term, but in the long run, the company has the potential to double among the other oil and gas sector stocks. Finding the best oil stocks to buy isn’t as easy as it was a few months ago. The price of crude oil ran up to a multiyear high of $120 a barrel shortly after Russia invaded Ukraine and again in mid-June as demand peaked with the summer driving season.
Generally speaking, it is relatively risky to buy individual stocks rather than index funds that provide broader exposure to the market. If you believe oil companies will do well but aren’t sure which ones to pick, you could also consider investing in an exchange-traded fund linked to oil. Oilfield services companies can also see big swings in profitability driven by oil prices. If oil prices go down, drilling becomes less profitable, and producers are less likely to spend money on equipment and services. If the price goes up, producers may spend more on oilfield services as they try to reach reserves that are more difficult to extract. Although it’s possible for investors to brave commodities markets and invest in oil directly, buying equities in oil companies can be more approachable for everyday investors, and potentially less risky.
Best-performing oil stocks
Top-rated analyst Gabriele Sorbara from Siebert Williams Shank is upbeat toward EOG, with a Buy rating and $172.00 price target. EOG posted revenues of $6.7 billion in Q4, a jump of 11.7% year-over-year. Adjusted earnings came in at $3.30 per share versus $3.09 in the same period a year ago. For fiscal 2023, Pioneer Natural Resources expects its capital expenditures to range between $4.45 billion and $4.75 billion and anticipates this to be fully funded by its fiscal cash flows of roughly $9 billion.
Borr Drilling is listed on the NYSE, has a trailing 12-month revenue of around USD$533.8 million and employs 1,504 staff. Transocean stock opened the day at $6.10 after a previous close of $6.24. Transocean is listed on the NYSE, has a trailing 12-month revenue of around USD$2.6 billion and employs 5,040 staff.
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Naturally, this criticality within the global economy also lends the industry some high valuations. The research firm believes that growth in the global population along with developments in the petrochemical and agricultural sectors will drive the industry forward. It adds that both Asia and North America will outpace the broader industry in terms of growth since the pair will each exhibit a 1.9% CAGR. These are the oil and gas stocks with the lowest 12-month trailing price-to-earnings (P/E) ratio. A low P/E ratio shows that you’re paying less for each dollar of profit generated. Profit can be returned to shareholders in the form of dividends and share buybacks.
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Performance Vs. Broader Markets
ConocoPhillips routinely boasts one of the highest credit ratings among E&P companies, backed by a low leverage ratio for the sector and lots of cash. They run the gamut from pure-play E&Ps, midstream companies, service providers, and refiners to integrated oil majors that do a little bit of everything. Investing in oil stocks can be risky due to the cyclical and volatile nature of the industry. While different segments of the industry come with their own set of risks, factors such as economic growth, geopolitics and capital allocation can impact the industry as a whole. ExxonMobil is the largest publicly traded oil company on earth. The Texas-based giant shattered records during a bumper 2022 off the back of surging oil prices, banking $56 million in profits, the highest ever for a Western oil company.
You should consider whether you can afford to take the high risk of losing your money. Smart portfolios enable you to gain passive exposure to several industries, such as oil. Furthermore, eToro is one of the best places to buy Bitcoin and dozens of other digital currencies, thanks to its popular crypto exchange.
Best Oil Stocks to Buy?
Companies that look and drill for oil are among the most volatile stocks in the oil space, Jones says, and their prices are very responsive to short-term trends. This can be a benefit if you buy at the right time or if the company you’re investing in makes a significant discovery of natural resources. When you see prices rising or falling at the gas pump, you might wonder how those market shifts are playing out with oil stocks on Wall Street. Nonetheless, geopolitical tensions, continued easing of Chinese lockdowns, and/or an economic rebound could boost oil prices next year. LNG is another one of Wall Street’s favorite energy stocks, as evidenced by the consensus Strong Buy rating and $197 price target. This average price target indicates that even after being up more than 10% in the past year, Wall Street pros see additional upside of roughly 25% for the shares.
- LNG has benefitted from the rising price of natural gas globally, along with increasing exports to Europe in recent weeks.
- “Our refineries operated at a 97 percent capacity utilization rate in the fourth quarter, which is the highest utilization rate for our system since 2018,” said Joe Gorder, Valero’s chairman and CEO.
- In addition, Devon Energy has demonstrated a commitment to environmental sustainability and responsible resource management, which has helped to maintain the company’s social license to operate.
- The company’s full-year capex guidance is between $10.7 billion and $11.3 billion.
- Its market capitalization is $529 million, and its EPS is $0.16.
Although each segment of the industry has a specific set of risk factors, the overall oil business is both cyclical and volatile. Occidental is notable for being one of Warren Buffett’s biggest stock holdings. Buffett began accumulating his stake in the company in September 2022, then bought more in March 2023.
So if you want to play the rise of energy stocks, consider investing in exchange-traded funds (ETFs) or mutual funds that focus on that specific sector. You’ll get the benefits of a diversified portfolio with the potential upside that energy stocks are famous for, though not without risk. Investing in individual stocks, particularly in the energy sector, can be difficult. You need to understand the dynamics of the industry but also the specific exposure that each energy company has, including the quality of its producing assets. Because of that volatility, a list of the best performers won’t tell you which stocks will do well in the future, but many of the top energy stocks remain the “best of breed” for years. And sometimes energy companies attract a big name investor or two, such as legendary Warren Buffett, who has been acquiring shares in Occidental Petroleum in the recent past.
The industry encompasses a wide range of activities, from exploration and production to refining, marketing, and distribution. However, the benefit of having multiple options is that investors have many options including buying shares https://forexarticles.net/trading-systems/ of ETFs that add even more diversity. And because oil and gas companies are taking an increased interest in renewable energy many of the most profitable oil stocks today will continue to be good investments in the future.
In the quarter, the company notched in earnings of $3.40 per share, along with revenue of $95.4 billion. This is in comparison to Wall Street’s consensus estimates that were earnings per share of $3.32 and revenue estimates of $99.7 billion. Moreover, revenue increased by 12.3% versus the same period, the previous year. VLO produced record margins and earnings in 2022, unlikely to be matched in 2023.