12 Best Energy Stocks To Invest In According to Analysts
In this article, we will take a look at the 12 best energy stocks to invest in according to analysts. If you want to explore similar stocks, you can also take a look at 5 Best Energy Stocks To Invest In According to Analysts.
On April 7, the Wall Street Journal reported that oil giant Exxon Mobil Corporation (NYSE:XOM) is exploring a potential acquisition of Pioneer Natural Resources Company (NYSE:PXD), one of the largest oil producers in the Permian Basin. Shares of Pioneer Natural Resources Company (NYSE:PXD) surged by roughly 6%, on April 10, during trading hours.
"There's So Much Money To Be Made Here"
On April 11 Gilman Hill Asset Management's CEO, Jenny Harrington, appeared in an interview on CNBC where she discussed the potential acquisition of Pioneer Natural Resources Company (NYSE:PXD) and her view on the energy sector. Jenny Harrington sees the potential acquisition as an opportunity for Exxon Mobil Corporation (NYSE:XOM) to invest its significant cash reserves in one of the major oil assets available in the Permian Basin. She believes this move could put a floor under not only Pioneer Natural Resources Company (NYSE:PXD), but also other companies with Permian assets such as Devon Energy Corporation (NYSE:DVN) and Occidental Petroleum Corporation (NYSE:OXY). Harrington noted that Devon Energy Corporation (NYSE:DVN) has 70% of its assets in the Permian Basin and Occidental Petroleum Corporation (NYSE:OXY) has approximately 55% of its assets in the Permian Basin.
Jenny Harrington suggests that investors should look at these companies based on their cash flow, and highlights the significant amount of "money to be made" in the energy sector. Jenny Harrington talked about the volatility in energy stocks and noted that even when energy stocks fall, she thinks that "when the stocks come down to these trough kind of levels, they're really compelling to buy". Here are some comments from Jenny Harrington:
"Whether we like it or not, we are totally dependent on fossil fuels, and those are here and we need them. You see things like U.S. gasoline demand decreasing, it's easy to latch on to that and say "oh everyone's running for EVs, who's gonna need gasoline anymore?". But when you take a step back and look at the broader global scale you actually see expectation for global demand of oil increasing over the next 5 years. So this really is just a great reminder of how much money there is still to be made in this space."
Further, Jenny Harrington noted that she bought Pioneer Natural Resources Company (NYSE:PXD) and Devon Energy Corporation (NYSE:DVN) within the last year, as she believes the Permian Basin holds the best global assets and future growth opportunities. She said that she concentrated her focus in the Permian Basin, and expects it to be the source of the best free cash flow.
Some of the best energy stocks to invest in right now according to Wall Street analysts include Valero Energy Corporation (NYSE:VLO), EOG Resources, Inc. (NYSE:EOG), and ConocoPhillips (NYSE:COP). Let's now discuss these stocks, among others, in detail below.
Photo by Austin Distel on Unsplash
Our Methodology
We screened for energy stocks and looked at each stock’s consensus analyst rating and average price targets. We narrowed down our selection to stocks that had received consensus Buy ratings from Wall Street analysts and had the highest average upside potential, as of April 11. Along with each stock, we have also mentioned the hedge fund sentiment that was sourced from Insider Monkey's database of 943 elite money managers.
Best Energy Stocks To Invest In According to Analysts
12. Exxon Mobil Corporation (NYSE:XOM)
Average Analyst Price Target as of April 11: 128.38
Average Upside Potential as of April 11: 10.92%
Number of Hedge Fund Holders: 79
At the end of the fourth quarter of 2022, Exxon Mobil Corporation (NYSE:XOM) was a part of 79 hedge funds’ portfolios that held collective stakes worth $7.10 billion in the company. Of those, GQG Partners was the most prominent shareholder and disclosed a position worth $3.6 billion.
Over the past 3 months, Exxon Mobil Corporation (NYSE:XOM) has received 12 Buy ratings and 5 Hold ratings from Wall Street analysts and has an average price target of $128.38, as of April 11. The stock is one of the best energy stocks to invest in. The stock's average price target implies an upside of 10.92% from current levels.
This April, Truist analyst Neal Dingmann raised his price target on Exxon Mobil Corporation (NYSE:XOM) to $116 from $110 and reiterated a Hold rating on the shares. As of April 11, the stock has returned 17.19% to investors over the past 6 months.
Some of Wall Street analysts' top energy stock picks include Valero Energy Corporation (NYSE:VLO), EOG Resources, Inc. (NYSE:EOG), and ConocoPhillips (NYSE:COP).
11. Chevron Corporation (NYSE:CVX)
Average Analyst Price Target as of April 11: $188.50
Average Upside Potential as of April 11: 10.97%
Number of Hedge Fund Holders: 57
Chevron Corporation (NYSE:CVX) is placed eleventh on our list of the best energy stocks to buy now according to analysts. On April 11, Truist analyst Neal Dingmann raised his price target on Chevron Corporation (NYSE:CVX) to $193 from $179 and maintained a Buy rating on the stock.
Chevron Corporation (NYSE:CVX) has received 5 Buy ratings from Wall Street analysts over the past 3 months and has an average upside potential of 10.97%, as of April 11.
At the close of Q4 2022, Chevron Corporation (NYSE:CVX) was spotted on 57 investors' portfolios that disclosed collective positions worth $32.2 billion in the company. Of those, Berkshire Hathaway was the largest investor in the company and disclosed a stake worth $29.25 billion.
Here is what Diamond Hill Capital had to say about Chevron Corporation (NYSE:CVX) in its fourth-quarter 2022 investor letter:
“Most recently in Q4, we increased our energy exposure by reinitiating a position in a company we know well and have owned in the past, integrated oil and gas company Chevron Corporation(NYSE:CVX).
We previously owned Chevron as recently as February 2022. We sold our position at that time due to heightened risk associated with operations in Kazakhstan, which sends oil through a pipeline that runs through Russia out to the Black Sea. When Russia invaded Ukraine, we believed there was real risk that something would happen to inhibit Chevron’s ability to get that oil to the market. We didn’t believe that risk was reflected in the stock price, so we sold our position. Today, 10+ months into the Ukraine crisis, more information has become available regarding the Kazakhstan operations, and the associated risks are now well-known. We believe those risks are fully priced into the current stock valuation. Chevron is one of the best operators in its field, with a diversified portfolio and strong management, and we took the opportunity to reinvest when the stock was trading below our estimate of intrinsic value.”
10. Occidental Petroleum Corporation (NYSE:OXY)
Average Analyst Price Target as of April 11: $72.33
Average Upside Potential as of April 11: 12.30%
Number of Hedge Fund Holders: 71
Over the past 3 months, Occidental Petroleum Corporation (NYSE:OXY) has received 9 Buy ratings and 5 Hold ratings from analysts and has an average price target of $72.33, as of April 11. The stock's average price target implies an upside of 12.30% from current levels.
On April 10, Mizuho analyst Nitin Kumar revised his price target on Occidental Petroleum Corporation (NYSE:OXY) to $79 from $83 and reiterated a Buy rating on the shares. The stock is one of the best energy stocks to invest in, according to analysts and has gained 8.84% over the past 12 months, as of April 11.
At the end of the fourth quarter of 2022, 71 hedge funds were eager on Occidental Petroleum Corporation (NYSE:OXY) and held positions worth $16.6 billion in the company. As of December 31, Berkshire Hathaway is the leading shareholder in the company and has disclosed a stake worth $12.2 billion.
Here is what Smead Capital Management had to say about Occidental Petroleum Corporation in its Q3 2022 investor letter:
“Our top-performing stocks in the quarter includes Occidental Petroleum (NYSE:OXY). Oil and gas have been the best game in the stock market town this year and it was a pleasant surprise to see home builders pick up even with dour news on interest rates and the economy. For the first three quarters of the year, we should change the name of our fund to the Jed Clampett Fund. Occidental Petroleum (NYSE:OXY), was one of the standouts. Up through the bear market came a “bubblin’ crude!”
9. Shell plc (NYSE:SHEL)
Average Analyst Price Target as of April 11: $69.01
Average Upside Potential as of April 11: 13.35%
Number of Hedge Fund Holders: 40
Shell plc (NYSE:SHEL) was held by 40 hedge funds at the close of Q4 2022. These funds disclosed collective stakes worth $3.04 billion in the company. As of December 31, Orbis Investment Management is the top shareholder in the company and has disclosed a stake worth $393 million.
On March 30, Deutsche Bank analyst James Hubbard updated his price target on Shell plc (NYSE:SHEL) to 2,854 GBP from 2,987 GBP and maintained a Buy rating on the shares. As of April 11, the stock has gained 20.79% over the past 6 months.
Shell plc (NYSE:SHEL) has received 5 Buy ratings from Wall Street analysts over the past 3 months, and has an average price target of $69.01. The stock's average price target represents an upside of 13.35% from its share price on April 11. Shell plc (NYSE:SHEL) is placed ninth among the best energy stocks to buy now according to analysts.
Artisan Partners made the following comment about Shell plc (NYSE:SHEL) in its Q4 2022 investor letter:
“We scaled back our weighting in clean energy this quarter, which is a part of the portfolio’s environment theme, to take profits after a successful run in 2022. We did so by trimming our position in Shell plc (NYSE:SHEL), a stock we added to the portfolio in Q1 2022. As an integrated energy company, approximately one third of Shell’s revenues come from transition fuels, such as LNG, and another third comes from new energy sources such as green hydrogen. LNG is one of the cleanest fossil fuels and represents a potential bridge to the future by replacing higher carbon energy sources with lower carbon ones while renewable technologies mature. As the largest LNG supplier in the world, we believe Shell is particularly well-positioned to help Europe meet its energy needs as it looks for ways to replace imported Russian oil and gas with new sources after the embargo.”
8. Marathon Petroleum Corporation (NYSE:MPC)
Average Analyst Price Target as of April 11: $151.31
Average Upside Potential as of April 11: 14.29%
Number of Hedge Fund Holders: 52
This April, Barclays analyst Theresa Chen raised her price target on Marathon Petroleum Corporation (NYSE:MPC) to $139 from $130 and maintained an Overweight rating on the shares. As of April 11, the stock has returned 19.18% to investors on a year-to-date basis.
Over the past 3 months, Marathon Petroleum Corporation (NYSE:MPC) has received 11 Buy ratings and 2 Hold ratings from Wall Street analysts. The stock has an average price target of $151.31, as of April 11, and an average upside potential of 14.29%. Marathon Petroleum Corporation (NYSE:MPC) is one of the best energy stocks to buy now.
At the end of Q4 2022, 52 hedge funds were long Marathon Petroleum Corporation (NYSE:MPC) and disclosed stakes worth $3.04 billion in the company. Of those, Elliott Management was the top shareholder and had a position worth $1.2 billion.
7. Canadian Natural Resources Limited (NYSE:CNQ)
Average Analyst Price Target as of April 11: $70.70
Average Upside Potential as of April 11: 19.24%
Number of Hedge Fund Holders: 41
Canadian Natural Resources Limited (NYSE:CNQ) has received 5 Buy ratings and 3 Hold ratings from analysts over the past 3 months. As of April 11, the stock has an average price target of $70.70, which implies an upside of 19.24%. Canadian Natural Resources Limited (NYSE:CNQ) is one of the best energy stocks to buy now according to analysts.
This March, Morgan Stanley analyst Devin McDermott revised his price target on Canadian Natural Resources Limited (NYSE:CNQ) to C$87 from C$90 and reiterated an Equal Weight rating on the shares. As of April 11, the stock has returned 10.21% to shareholders over the past 6 months.
Canadian Natural Resources Limited (NYSE:CNQ) was spotted on 41 hedge funds' portfolios at the end of the fourth quarter 2022. These funds held positions worth $1.84 billion in the company. As of December 31, Yacktman Asset Management is the largest shareholder in the company and has a position worth $842.5 million.
6. Enterprise Products Partners L.P. (NYSE:EPD)
Average Analyst Price Target as of April 11: $32.40
Average Upside Potential as of April 11: 20.13%
Number of Hedge Fund Holders: 24
At the end of Q4 2022, Enterprise Products Partners L.P. (NYSE:EPD) was held by 24 hedge funds that disclosed collective stakes worth $242 million in the company. Of those, Fairholme (FAIRX) was the most prominent investor in the company and disclosed a position worth $99.9 million.
This March, Scotiabank analyst Tristan Richardson took coverage of Enterprise Products Partners L.P. (NYSE:EPD) with an Outperform rating and a $31 price target. The stock has received 9 Buy ratings and 1 Hold rating from Wall Street analysts over the past 3 months and has an average price target of $32.40, as of April 11. The stock's average price target implies an upside of 20.13% from current levels. Enterprise Products Partners L.P. (NYSE:EPD) is placed sixth on our list of the best energy stocks to buy now.
Legacy Ridge Capital made the following comment about Enterprise Products Partners L.P. (NYSE:EPD) in its Q4 2022 investor letter:
“Enterprise Products Partners L.P. (NYSE:EPD) is still owned in the fund and remains one of our largest positions, as it has been since the partnership was founded. This has not been a great investment. Shares are down about 6% since I first wrote about it. However, we have received $8.93 per share in dividends, which is about 34% of the 2018 share price. So, with dividends included we’ve made 28% cumulatively over 5-years. Still not good, but not an impairment of capital either.
Since 2018, EPD’s dividend yield has gone from 6.5% to 8% with the annual per share payout growing from $1.72 to $1.96, +14%. The pace of dividend growth has recently increased from about 2% to 5%+. Additionally, Distributable Cash Flow per share (what could be paid to us if management wanted to) has increased 22%, from $2.73 to $3.33, while leverage has come down a little over ? a turn. So, the balance sheet and cash flow metrics are in better shape than they were 5-years ago, and they were pretty good 5-years ago.
The competitive dominance of the asset base, industry leading low leverage, and a founding family with multiple billions of dollars invested alongside us keep it a core holding in the portfolio. We’ll continue to own this company unless the shares become meaningfully overvalued, and if it gets cheaper, we would be very comfortable owning more.”
In addition to Enterprise Products Partners L.P. (NYSE:EPD), other energy stocks that Wall Street analysts see promising upside to include Valero Energy Corporation (NYSE:VLO), EOG Resources, Inc. (NYSE:EOG), and ConocoPhillips (NYSE:COP).
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Disclosure: None. 12 Best Energy Stocks To Invest In According to Analysts is originally published on Insider Monkey.