Oil and gas stocks are imperative for savvy investors — despite the global push towards net carbon neutrality.
With alternative fuels still unable to meet the world’s energy requirements, the demand for fossil fuels is unlikely to go anytime soon. The International Energy Agency (IEA) forecasts a peak in oil demand by 2030 despite the shift towards cleaner energy. Likewise, OPEC anticipates that oil usage will rise in the next few decades.
Moreover, the global oil and gas market is expected to reach $8.57 trillion by 2030, growing at a 3.80% CAGR from 2023 to 2030. This growth highlights the sector’s critical role in the global energy mix, as fossil fuels remain a mainstay before the shift to complete green energy. Therefore, investors should consider three oil and gas stocks this month.
Suncor Energy (SU)
Suncor Energy (NYSE:SU) stands out in the energy sector with its powerful presence in Alberta oil sands and an extensive gas station network. The company’s strategic maneuvers, including restarting Terra Nova production, have significantly bolstered its productive capacity and operational efficiency.
Moreover, SU sets an optimistic tone for 2024, projecting an uptick in upstream production with a 7% increase from 770,000 to 810,000 barrels daily. Additionally, SU’s focused three-year plan for its Fort Hills asset aims to improve value while trimming costs and brightening Suncor’s prospects.
Financially, SU is pushing forward despite the market weaknesses, with a notable 5.8% increase in stock price year-to-date (YTD) and an impressive quarterly sales of $10.47 billion, a 0.8% bump year-over-year (YOY). Additionally, its earnings-per-share (EPS) soared to $1.61, surpassing forecasts by $1.08, complemented by a 5% hike in quarterly dividends. TipRanks analysts further highlight its promising potential, assigning SU a ‘moderate buy,’ foreseeing a 15.9% upside potential.
Chevron (CVX)
Oil-and-gas behemoth Chevron (NYSE:CVX) consistently ranks among the top players in its sector. Perhaps one of the most noteworthy late developments with Chevron is its acquisition of Hess Corporation (NYSE:HES), a move to boost its impressive free cash flow base. This development, coupled with an aggressive capital investment target of $16 billion for the current year, underscores Chevron’s commitment to adding new layers to its illustrious growth story.
Adding to the optimism, Chevron’s operations in the Permian Basin have outperformed expectations, delivering a commendable 10.7% annual gain. Moreover, despite the plunge in yearly profits, Chevron’s proactive stance on shareholder returns remains laudable. The company anticipates an 8% dividend hike following a record $26.3 billion returned to shareholders last year through dividends and buybacks.
Hence, TipRanks analysts give Chevron a ‘moderate buy’ rating, forecasting a 14.21% upside potential, highlighting CVX’s promising outlook for long-term investors.
ExxonMobil (XOM)
ExxonMobil (NYSE:XOM) is another juggernaut in the oil and gas industry on a trajectory similar to Chevron’s. Its bold $59 billion acquisition of Pioneer Natural Resources (NYSE:PXD) positions it as a leading producer in the Permian Basin, covering 40% of U.S. oil production. Simultaneously, XOM is actively addressing climate change, targeting a 20% to 30% reduction in greenhouse gas emissions by 2030 from 2016 levels. Additionally, XOM’s launch of the MobilTM Lithium business aims to support one million electric vehicles (EVs) annually by 2030 — signaling its venture into new energy sectors.
Moreover, XOM is set to boost production to 3.8 million barrels per day this year, tapping into the Permian Basin and Guyana. Additionally, its robust operational strength is exemplified by comfortably surpassing expectations in its most recent quarter, with an EPS of $2.48. Its profitability metrics are strong, demonstrating resilience against external challenges. Consequently, TipRanks analysts assign Exxon a ‘moderate buy’ rating with 20.44% upside potential, underlining a bright future for the company.
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
