Energy stocks, crucial for powering homes, businesses, and vehicles, saw their stocks dip slightly in 2023. Yet investors, like Fidelity’s energy sector portfolio manager, are optimistic for 2024, pointing to tight supply, robust demand, and higher production investments as reasons for potential growth in energy stocks. Among these, Exxon Mobil (NYSE:XOM) has been standing out as a leader in oil and gas exploration, production, refining, and marketing. Its comprehensive involvement in the energy field offers investors a varied portfolio. Inspired by its success, many energy companies have also thrived in the industry, reaching high potential.
Furthermore, Morningstar predicts that the U.S. electricity demand will grow by 1.4% annually until 2032, with solar, wind, hydroelectric, and geothermal companies leading this surge. This growth, along with stable oil prices, presents a promising outlook despite the ongoing volatility, showcasing a sector rich in both traditional and innovative investment opportunities. So, let’s explore the three energy stocks investors shouldn’t ignore.
Energy Stocks: Enterprise Products Partners (EPD)
Enterprise Products Partners (NYSE:EPD) stands out in the energy sector by providing essential services to a diverse client base in crude oil, natural gas, and natural liquid gas markets. Over the past year, EPD’s share price has risen by 0.8%. Impressively, the company offers a strong dividend yield of 7.6%, supported by 25 consecutive years of distribution growth as of 2023.
In a recent financial showcase, EPD reported a revenue surge to $14.62 billion, marking a 7.12% increase year-over-year (YOY). Earnings-per-share (EPS) also exceeded expectations by 4 cents, coming in at 72 cents. Furthermore, the firm upped its cash distribution by 5.1% after completing $3.5 billion in capital growth projects.
Moreover, EPD showcased its operational efficiency by launching two new natural gas processing plants in the second half of 2023. These facilities quickly reached full capacity, underscoring the high demand for EPD’s services. TipRanks analysts echo the positive sentiments, giving EPD a ‘strong buy’ rating with a 22.15% upside potential.
NextEra Energy (NEE)
NextEra Energy (NYSE:NEE) shines brightly in the renewable energy cosmos due to its vast wind and solar endeavors. The Cavendish NextGen Hydrogen Hub in Okeechobee County, Florida, showcases the company’s pioneering spirit. This clean hydrogen facility stands as a testament to NextEra’s commitment to exploring sustainable energy innovations.
Financially, NextEra Energy showed potential as its EPS of 52 cents soared past Wall Street predictions, alongside a revenue triumph of $6.88 billion, which exceeded estimates by a whopping $557 million. A strategic play further buoyed this financial prowess during a 14% plummet in natural gas prices, attributed to sufficient storage and an unexpectedly mild winter.
Looking forward, NextEra Energy aims for an adjusted EPS growth of 6% to 8% annually through 2026 from 2024 levels. With TipRanks analysts giving NEE stock a ‘moderate buy’ rating and predicting a 25.01% upside potential, the future indeed looks bright for this renewable energy titan.
Devon Energy (DVN)
Devon Energy (NYSE:DVN), a leader in hydrocarbon exploration, excels in the upstream energy sector, boasting a five-year dividend growth rate of 21.67%. This demonstrates the company’s durability and potential for future growth. Embracing renewable energy, Devon has invested $10 million in Fervo Energy, a pioneer in geothermal technology, showing its commitment to the renewable sector’s future.
Moreover, DVN’s strategy goes beyond mere investments to include bold acquisitions, notably its pursuit of Enerplus Corp. This effort aims to strengthen its oil and gas sector presence, boost its operational capabilities, and diversify its portfolio.
Financially, DVN exceeded expectations with an EPS of $1.65, surpassing forecasts by 10 cents. Despite a YOY revenue drop of 29.3%, the company still managed to outdo revenue expectations by $211 million. This financial prowess, coupled with a ‘moderate buy’ rating from TipRanks analysts and a 31.38% upside potential, positions Devon Energy as a compelling investment choice.
On the date of publication, Muslim Farooque did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
