This summer is set to be a record breaker – with multiple heatwaves already impacting millions of people across the U.S. – even though we are still at the start of July. The weather has been so extreme that, tragically, people have passed away due to the heat this year.
The heat will naturally cause a spike in demand for energy-centric companies as more people use air conditioners in order to cool down, which is why today, I’ll be talking about three energy companies you should invest in. The influx in demand comes at a crucial stage for all of these companies. If you want to crank up the magnitude of your returns, consider scooping up the shares of these three energy companies.
Tesla (TSLA)
Tesla (NASDAQ:TSLA) is primarily an EV company but has recently started to expand far beyond just vehicles. It is developing the “Tesla Bot,” an AI-powered robot. Additionally, it has also rapidly expanded Tesla Energy. TSLA’s energy division has seen rapid growth recently, making it an intriguing energy play for investors.
In terms of quarterly revenue growth, TSLA has seen a reduction of -8.7% YoY, with a reduction of -55.1% in earnings YoY. The profit margin is sitting at 14.37%, with a lower operating margin of 5.50%. This reduction is drastic, but investors are bullish for multiple reasons, and this reduction is likely already priced in.
TSLA has seen rapid growth in its valuation over the last few weeks; it is up over 50% over the last month, with investors being bullish on different concepts such as Robotaxi. However, it is important to note the impact of its energy segment, with Morgan Stanley increasing its price target for TSLA primarily based on the sector. This is for good reason; in Q2 2024, it deployed 9.4 GWh of energy storage, which is a record for the company, but pails in comparison to what is expected soon. This came as the company missed vehicle delivery targets, making it an important catalyst for investors to consider and weigh.
Exxon Mobile (XOM)
Exxon Mobile (NYSE:XOM) is a premier crude oil and natural gas explorer and extractor. While it is based in the U.S., it operates all over the world, with many of its investments being international. Earnings are coming on July 26th, and as analysts are expecting lower earnings, the stock has slipped over the last month.
It’s currently trading at a price of $113+ and is up almost 1% over the last month. The company has reported troubling earnings lately, by missing estimates in three of the last four quarters. Quarterly revenue is down 3.5% over the last year, with earnings down 28.1% over the same period. This is due to volatility in global energy prices, with has significantly impacted the margins XOM has.
However, there are reasons to be bullish, especially for the long run. Due to expectations sliding before earnings are released, a miss will already be priced in – to a certain extent. Additionally, a new director bought $2 million worth of XOM, which is a significant bullish move and carries a heavy impact. Additionally, investments in international locations for the purpose of oil/natural gas explorations indicate the company’s commitment to increasing the stream of supply it has.
NextEra Energy (NEE)
NextEra Energy (NYSE:NEE) is a leading clean energy company specializing in renewable power generation, operating wind, solar, and natural gas facilities, and providing electricity through its subsidiaries, including Florida Power & Light.
NEE stock is currently trading at ~$75, with a market cap of about $154 billion. NextEra has great financials, proven by its profit and operating margins of 27.62% and 34.78% respectively. It has a beta of 0.54, which makes NEE stock a relatively stable investment. It has consistently beaten EPS predictions over the past year, with an average surprise of 9.5%.
The stock is considered a ‘Buy’ and ‘Overweight’ by multiple reputed financial institutions. The company has proved its resiliency by staying profitable and delivering solid results despite fluctuations in the energy market. Investors looking for a stable, long-term investment should consider buying NEE stock for steady growth and low volatility.
On the date of publication, Achintya Pasricha 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.
On the date of publication, the responsible editor did not have (either directly or indirectly) any positions in the securities mentioned in this article.
