If you’ve filled up your gas tank recently, you know that the cost of gasoline is still high. And this is also the season where home heating costs rise in correlation with falling temperatures. These are tailwinds for energy stocks.
If you value growth in your portfolio, consider buying great energy stocks at some point. There will always be a keen demand for energy all around the world. It’s an evergreen sector that never really goes out of style.
You can find great energy stocks in legacy oil and gas companies, but renewable energy also provides an interesting way to diversify your energy holdings by betting on clean technologies.
With the Portfolio Grader, you can quickly identify the best energy stocks in on the market today. The Portfolio Grader gives top-rated “A” grades to stocks that have superior earnings growth, sales growth, momentum, analyst sentiment and other factors.
If you’re looking to increase your profits with your portfolio, consider these seven excellent energy stocks.
Diamond Offshore Drilling (DO)
Diamond Offshore Drilling (NYSE:DO) is a Texas-based offshore drilling contractor that operates around the world. The company has a dozen drilling rigs to perform deepwater drilling for oil.
In September it announced a refinancing plan, issuing $550 million in senior secured second lien notes at 8.5%, due in 2030. The company said it would use the funds to pay off debt, which at the end of the second quarter stood at $510.8 million.
The company is in solid financial shape, with profit margins better than 22% and revenue growth of 49% from a year ago.
Earnings in the second quarter included revenue of $281.5 million and earnings per share of $2.29. Diamond Offshore says that its rigs have revenue efficiency of more than 96% for five consecutive quarters.
DO stock is up 34% in 2023 and gets an “A” rating in the Portfolio Grader.
Flame Acquisition Corp. (FLME)
Flame Acquisition Corp. (NYSE:FLME) is a blank check company that has a tentative deal to merge with Sable Offshore, a natural gas exploration company that’s based in Nova Scotia.
The deal was first announced in November 2022 but still hasn’t come together; it recently got an extension from shareholders to close the merger by March 1, 2024.
Sable has an agreement to acquire the Santa Ynez oil field off the California coast from Exxon Mobil (NYSE:XOM), as well as onshore processing and pipeline assets for $625 million. The deal includes three offshore platforms that are targeted to come online by July 2024.
Flame’s CEO is Jim Flores, who is no stranger to the oil and gas space. He is a former CEO of Sable Permian Resources, and former CEO of Freeport-McMoRan Oil & Gas, which is a subsidiary of Freeport-McMoRan (NYSE:FCX).
The special purpose acquisition company’s shares are currently priced around $10 per share, which is about right for a yet-to-be-closed SPAC deal. But when the merger goes through and the Santa Ynez oilfield begins production, profits should start rolling in quickly.
FLME stock gets an “A” rating in the Portfolio Grader.
HNR Acquisition Corp. (HNRA)
HNR Acquisition Corp. (NYSEAMERICAN:HNRA) is another SPAC on our list. It has an agreement to merge with Pogo Resources, which is an oil company based in New Mexico.
Pogo has 550 wells that produce oil and gas on roughly 13,700 acres of land on the northwest shelf of the Permian Basin in New Mexico. The deal is valued at $90 million, including a net aggregate of $63 million cash.
Pogo also has a 100% ownership interest in LH Operating, which is the owner and operating entity of the properties.
The combined company would control reserves of $434 million. LH Operating began developing the wells in 2020 and saw revenue growth of $9 million in 2020, $18 million in 2021 and $35 million in 2023, so the growth trajectory is strong.
Investor interest in flashy SPAC deals has cooled off in recent quarters, but this deal looks to be more substance than sugar. HNRA stock has an “A” rating in the Portfolio Grader.
Par Pacific Holdings (PARR)
Par Pacific Holdings (NYSE:PARR) is an oil refiner that operates in the western U.S.
It provides gasoline products in the Rockies market through its facilities in Wyoming and Montana, and its refinery in Tacoma, Washington, stands as the only asphalt producer in the Pacific Northwest.
Par Pacific also has a refinery in Hawaii, where it focuses on producing jet fuel for tourism and fuel oil for local utilities.
The company owns and operates nearly 550 miles of pipelines and has 13 million barrels capacity of oil storage.
Second quarter numbers included revenue of $1.78 million, down from $2.1 million a year ago, a reflection of the drop in oil prices from 2022. But income was still solid, at $30 million or $49 cents per share.
The company also increased its stock repurchase program, upping the planned $50 million authorization to $250 million.
PARR stock is up 44% in 2023 and get an “A” rating in the Portfolio Grader.
Profire Energy (PFIE)
Based in Utah, Profire Energy (NASDAQ:PFIE) is an oilfield technology company that designs burner-management systems and combustion-management technologies.
Its products help oilfield companies control startups and shutdowns, monitor temperatures and control the flame of their operations. It works with some of the biggest oil and gas production companies in the world.
Its products are used by upstream, midstream and downstream sectors in the oil and gas industry.
Revenue in the second quarter came in at $14.4 million, a gain of nearly 50% from a year ago. Net income was $2.9 million, a gain from $284,000 in the same quarter a year ago.
PFIE stock is up 112% from a year ago. It gets an “A” rating in the Portfolio Grader.
Seadrill (SDRL)
Seadrill (NYSE:SDRL) is an offshore drilling contractor for the oil and gas industry. The company operates drillships, semi-submersible and jack-up rigs in shallow to deep water.
It has 21 rigs operating in Qatar, Malaysia, Norway, Angola, Namibia, India, Brazil and in the Gulf of Mexico.
The company is in a strong financial position, with revenue in the second quarter jumping to $414 million from $266 million a year ago. Profits more than doubled to $109 million from $51 million in the same quarter of 2022.
Earnings per share in the quarter were $1.16, an increase from 83 cents per share a year ago.
Seadrill also authorized a $250 million stock buyback program, which will bring more value to shareholders.
SDRL stock is up 31% in 2023. It gets an “A” rating in the Portfolio Grader.
Tetra Technologies (TTI)
Tetra Technologies (NYSE:TTI) works with the upstream energy industry, companies that search for oil or gas deposits and extract them through drilling or other methods.
Tetra’s focus is on bromine-based completion fluids, calcium chloride, water management, frac flowback and production well testing services.
It is expanding its research in low-carbon energy markets by developing Tetra PureFlow, which is a zinc bromide clear brine fluid for stationary batteries and energy fluid.
Revenues in the second quarter were at an all-time high for the company, coming in at $175.4 million, versus $140.7 million a year ago.
Income of $18.2 million included earnings per share of 13 cents, which was an improvement of $1.7 million and 5 cents per share a year ago.
TTI stock is up 79% this year and gets an “A” rating in the Portfolio Grader.
On the date of publication, Louis Navellier had long positions in PARR, PFIE and XOM. Louis Navellier did not have (either directly or indirectly) any other positions in the securities mentioned in this article.
The InvestorPlace Research Staff member primarily responsible for this article did not hold (either directly or indirectly) any positions in the securities mentioned in this article.
