Top Oil Stocks for an Energy Dependent World

Even in a perfect work, this sector can be quite volatile as supply and demand are constantly shifting. 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.

There is also the potential for a high level of price appreciation, irrespective of whether crude oil zooms back above $100 per barrel or trades sideways from here. TotalEnergies is an integrated oil and gas company that explores for, produces, and refines oil around the world. In 2020, it produced 1.5 million barrels of liquids and 7.2 billion cubic feet of natural gas per day. At year-end 2020, reserves stood at 12.3 billion barrels of oil equivalent, 43% of which are liquids. The company operates refineries with capacity of nearly 2.0 million barrels a day, primarily in Europe, distributes refined products in 65 countries, and manufactures commodity and specialty chemicals.

However, oil companies operating independently of OPEC can also impact prices through capital allocation decisions that affect supply. 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. PSX’s trailing dividend yield over the past five years is lower than most other companies on this list.

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Exxon Mobil Corporation (XOM)

On the back of a solid first quarter, the company has raised its full-year guidance for both EBITDA and distributable cash flow. The company now expects consolidated adjusted EBITDA to come within the range of $8.20 billion to $8.70 billion, while distributable cash flow is expected to arrive between $5.70 billion and $6.20 billion. MPC shares were trading at $109.47 per share on Tuesday morning, up $0.76 (+0.70%).

• This transition presents both challenges and opportunities for oil companies as they adapt their business models and invest in alternative energy solutions.
• The firm’s asset base is spread throughout onshore North America and includes exposure to the Delaware, STACK, Eagle Ford, Powder River Basin, and Bakken plays.
• The increased cash flow will also fuel Exxon Mobil’s buyback and dividend efforts.
• Additionally, the companies performed well during the very favorable oil climate of the last year, while cash is on hand to help weather inevitable upticks in volatility in the industry going forward.
• These tend to pay high dividends, Jones says, and they are popular with retail investors.

Supply and demand imbalances can cause huge fluctuations in oil prices. We saw that in early 2022 after Russia’s invasion of Ukraine, which sent crude prices soaring into the triple digits for the first time in years. It takes raw crude oil and produces refined petroleum products, like gasoline and jet fuel. Its operations vary from processing and transportation to storing and marketing fuels. 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.

The company launched an industry-first, fixed-plus-variable dividend framework in 2021. It pays out as much as 50% of its excess cash flow each quarter via variable dividend payments after funding its fixed base dividend and capital expenses. Devon uses the rest of its excess cash to strengthen its balance sheet and repurchase shares.

Get this delivered to your inbox, and more info about our products and services. Any trading and execution of orders mentioned on this website is carried out by and through OPCMarkets. Marathon Petroleum also said it expects lower capital spending in 2023 of $1.3B, with 40% of growth capital going into low-carbon projects.

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A long-time financial journalist, Dan is a veteran of SmartMoney, MarketWatch, CBS MoneyWatch, InvestorPlace and DailyFinance. As a senior writer at AOL’s DailyFinance, Dan reported market news from the floor of the New York Stock Exchange and hosted a weekly video segment on equities. Although the company posted “slightly disappointing” fourth-quarter results by its own historical standards, Freeman stresses that EOG will have some of the largest production growth in his coverage area.

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. Meanwhile, the Street’s average price target of $172.97 gives FANG implied price upside of about 23% in the next 12 months or so. Add in the generous dividend yield of 8%, and FANG’s implied total return comes to more than 30%. With an average price target of $130.42, Wall Street gives COP implied price upside of about 22% in the next 12 months or so.

Energy Stocks And Industry News

Also like Berkshire, Occidental Petroleum is using its profits to buy back its own stock, as it has announced a $3 billion share repurchase program. Buffett no doubt likes that OXY stock nearly doubled in 2022, making it one of the best-performing stocks in the S&P 500. Nonetheless, their prospects can vary considerably because of the price of oil. This may influence which products we review and write about (and where those products appear on the site), but it in no way affects our recommendations or advice, which are grounded in thousands of hours of research. Our partners cannot pay us to guarantee favorable reviews of their products or services.

These tend to pay high dividends, Jones says, and they are popular with retail investors. 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. Prices keep fluctuate often and there’s pressure on the industry from both short-term and long-term headwinds. Despite any problems that might arise, remember that the oil market tends to be a safe place to hold assets for long periods of time. There is quite a lot of growth potential in this sector, and you should keep your eye on the oil industry even as renewable energy becomes a powerful force worldwide.

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LNG shares were trading at $149.76 per share on Tuesday afternoon, up $0.17 (+0.11%). Year-to-date, LNG has gained 0.13%, versus a 7.88% rise in the benchmark S&P 500 index during the same period. LNG’s trailing-12-month EBITDA margin of 43.2% is 21.4% higher than the 35.6% industry average.

Founded in 1993 by brothers Tom and David Gardner, The Motley Fool helps millions of people attain financial freedom through our website, podcasts, books, newspaper column, radio show, and premium investing services. Please note that the stocks above were selected by an experienced financial analyst, but they may not be right for your portfolio. Before you decide to purchase any of these stocks, do plenty of research to ensure they are aligned with your financial goals and risk tolerance. Share buybacks are another route through which the company plans to spend its excess cash.

Liberty Energy Inc. (LBRT)

Our estimates are based on past market performance, and past performance is not a guarantee of future performance. Unlike many of its peers, however, FANG has managed to generate positive returns in 2023, gaining 5.7% for the year-to-date. Of the 31 analysts covering the stock tracked by S&P Global Market Intelligence, 16 rate it at Strong Buy, eight say Buy and seven have it a Hold.

But what particularly excited shareholders is the fact that the company’s Distributable Cash Flow (“DCF”) increased 17 percent to $7.8 billion for 2022 compared to $6.6 billion for 2021. Like many MLPs, EPD is a big-dividend payer, with current yield at 7.43%. Sitio will plow a portion of this cash flow back into new acquisitions, but a lot of it will come back https://business-oppurtunities.com/ad-headlines-for-online-marketing/ to shareholders, primarily in the form of dividends. STR’s payouts are variable, but if oil prices continue to trend higher, chances are STR will continue to sport a double-digit dividend yield. With a payout ratio of 36%, this payout is likely sustainable if energy prices hold up. But EPM’s above-average yield isn’t the only thing to be excited about.

• Also, the company’s EPS is expected to grow 24.8% per annum over the next five years.
• Given the growth of renewables, many investors are choosing to avoid oil stocks entirely.
• TotalEnergies is a French integrated oil and gas company with a presence across the value chain.
• Carefully considering your options and monitoring their performance is the best way to keep your portfolio in good condition.
• However, the stock has rallied 8% since hitting a year-to-date closing low in mid-March, and the Street sees more outperformance ahead.

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. Its share price has risen 50% to $25 in the last year as the price of crude oil has climbed.

However, declining oil and gas prices in the second half of 2022 and into 2023 could pressure margins and revenues in the sector. Aanchal’s passion for financial markets drives her work as an investment analyst and journalist. She earned her bachelor’s degree in finance and is pursuing the CFA program. She is proficient at assessing the long-term prospects of stocks with her fundamental analysis skills. Her goal is to help investors build portfolios with sustainable returns. In detail, the energy company reported 4th quarter 2022 earnings of $1.61 per share, with revenue of $8.3 billion.

MPC’s trailing-12-month levered FCF margin of 6.72% is 6.2% higher than the industry average of 6.33%. Likewise, its trailing 12-month ROCE, ROTC, and ROTA of 64.18%, 22.71%, and 18.84% are 169.9%, 108.5%, and 116.9% higher than the industry averages of 23.77%, 10.89%, and 8.69%, respectively. View the latest top Barchart Exclusives stories, with a focus on today’s important stocks, ETFs, and commodity market news.