Energy remains a quintessential resource because it’s everywhere. From your car, house lights and even air conditioner, energy is ubiquitous. However, amidst the current “energy revolution” where a larger emphasis is now put on developing clean renewable energy, the current energy situation seems more uncertain than ever before.
Amidst larger geopolitical concerns with traditional energy sources and interest rate pressures on newer renewables, we currently are sitting at a crossroads where both sources hold their pros and cons. This, of course, situates investors in a difficult situation on how to best diversify their energy stock picks.
Hence, exploring quality energy stocks, both clean and traditional, is of the utmost importance currently. In this article, we’ll dive into different types of energy stocks which all have their own specialties and importance to the energy industry. The common denominator? They are all undervalued energy stocks candidates for any investors’ portfolios this June.
NextEra Energy (NEE)
NextEra Energy (NYSE:NEE) produces and markets sustainable electricity and power solutions for infrastructure all over North America. Currently, Yahoo! Finance analysts project a one-year price range between $46 and $102, with an average of $76.
Recently, the company announced its plan to invest over $18.3 billion into clean and renewable energy sources and over $43.8 billion in total to their growing infrastructure from 2024 to 2028. By expanding its clean energy sources, NextEra gets one step closer to achieving its sustainability goals while still allotting over $20 billion other dollars to diversify its assets. While the upcoming election does pose pressures on renewable energy credits, we see NEE’s bolstering of assets on multiple fronts as a safe growth mitigant to potential volatility.
Looking at the financials, we see NEE has boasted impressive year-over-year (YOY) revenue growth statistics while keeping its operational costs nearly constant. From 2022 to 2023, YOY revenue growth was 34.15% while the cost of revenue remained at a constant 10 billion dollars, showing NextEra’s ability to scale its business efficiently. Given that its EV/EBITDA ratio of 16.17x sits at an almost 30% discount to its historical 5-year average currently, NextEra stands as an amazing option among undervalued energy stocks for any investor this June.
Halliburton Company (HAL)
Halliburton Company (NYSE:HAL) operates in over 70 countries and focuses on the exploration and extraction of oil and natural gas. Yahoo! Finance analysts currently forecast a one-year price target between an average of $48.31 and a high of $54.
Halliburton has spent well over $64 million on savvy acquisitions to expand their operations worldwide. By combining its two business sectors: completion/production and drilling/evaluation into worldwide operations, the company has an undeniable foot in oil and gas production, making it the second largest producer in the world. As the overall shale industry makes its way toward a focus on cash flow and profitability, HAL will no doubt benefit from higher margins and valuable market positioning.
The company’s financials are equally impressive, with YOY EPS growth hitting nearly 70%! Valuation-wise, its P/E ratio of 11.76x sits sound below the Oil and Gas Equipment industry average of 14.27x, demonstrating how the stock is well undervalued at its current price. Combining the stock’s undervalued nature with its healthy, worldwide operations makes Halliburton a great undervalued energy stocks position for any investor.
General Motors (GM)
General Motors (NYSE:GM) is an automobile manufacturer best known for its production of Chevrolet, Buick, Cadillac, and GMC. While this may seem like an unconventional energy pick, GM’s focus on the development of electric vehicles and related home energy applications has been key toward pushing Yahoo! Finance analysts toward maintaining a bullish one-year price target between an average of $54 to a high of $96.
For the past five years, General Motors has invested over $35 billion into the production of electric vehicles and the charging they require, outweighing the company’s investment in gas and diesel car production. Additionally, the company has come forth with countless energy infrastructure developments, including enterprise and residential energy services. As these investments embrace the company’s vision of an “all-electric future,” GM remains an undervalued tangential growth company to look out for as the energy industry reaches its turning point.
General Motors’ financials also remain impressive, as it boasts solid YOY EPS and revenue growth of 19.1% and 9.7% respectively. Its P/E ratio of 5.53x also sits far below the industry average of 20.37x, positioning it at an extremely undervalued price point. All of these factors should make any investor’s mouth water, for the company is making strides toward clean energy while keeping its solid financial grounding.
On the date of publication, Ian Hartana and Vayun Chugh did not hold (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.
