Despite their enticing nature, oil stocks are always tricky. Subject to multiple factors, particularly geopolitical pressures, the energy sector is often a hit-or-miss affair. Additionally, with the current Trump administration at the helm over unprecedented issues, this year should be especially unpredictable.
Having said that, barring unusual circumstances occurring, oil stocks offer significant upside potential. One of the biggest catalysts for energy and commodities markets is the weakening U.S. dollar. Since President Trump’s inauguration, the dollar index has slipped nearly 7%.
Indeed, had the greenback not improved significantly over the past month, we’d be looking at even worse devaluation than we’re presently experiencing. Of course, with inflationary pressures come higher energy costs.
In the aforementioned timeframe, the international benchmark Brent Crude Oil skyrocketed to nearly 44%. West Texas Intermediate, too, gained an impressive 35%. Neither index show signs of slowing, especially with the busy driving season ahead.
If there’s any time to risk getting into energy, now is it.
#1 Oil Stocks to Buy: Exxon Mobil Corporation (XOM)
No discussion about oil stocks to buy is complete without mentioning the granddaddy of them all, Exxon Mobil Corporation (NYSE:XOM). With a market capitalization north of $345 billion, no other American oil company comes close.
This isn’t just a case about a stalwart resting on its laurels, either. While Exxon got off to a choppy start this year, its gaining momentum. Since the beginning of April, shares are up over 11%. Investors can anticipate further gains as industry-wide tailwinds boost most oil stocks.
Financially, we’re seeing the fruits of an initially painful recovery process. For fiscal 2017, XOM generated $237.2 billion in revenues, an increase of 18% over the prior year.
In its first-quarter 2018 report, XOM brought in $65.4 billion, which is nearly a 16% year-over-year improvement.
#2 Oil Stocks to Buy: Chevron Corporation (CVX)
Seemingly a perennial number two, Chevron Corporation (NYSE:CVX) is certainly no slouch. At a market cap nearly touching $244 billion, its making significant ground against rival Exxon Mobil. More importantly to shareholders, CVX stock is the better performer.
Year-to-date, CVX is up 4%. While this metric isn’t something to get excited about, consider that XOM shares are essentially flat for the year. Moreover, Chevron started its market recovery earlier. Closing at a year-low of $108.12 on Feb. 21, CVX has since gained nearly 19%.
Chevron is also making its recovery plan work. Its 2017 annual revenue haul was $134.7 billion, or a 22% jump from the prior year. The figure also represents a 3.7% gain from fiscal 2015, which is particularly impressive.
Among major oil stocks, you can’t go wrong with either of these two titans. However, CVX does have a little more upside kick.
#3 Oil Stocks to Buy: ConocoPhillips (COP)
Rounding out the top three American oil stocks is ConocoPhillips (NYSE:COP). With a market cap just over $81 billion, the margin between second and third place is a dramatically wide one. Nevertheless, don’t let mere size fool you.
On a YTD basis, COP stock easily takes the two aforementioned titans to school, gaining a massive 27%. Not only that, against its closing low for this year, COP is up nearly 34%.
The market sentiment isn’t just based on overall bullishness toward oil stocks. Fundamentally, ConocoPhillips’ management team focused on its recovery plan following the 2014 energy-sector meltdown. Last year, COP brought in $29.1 billion in sales, up nearly 23% from one year ago. For Q1, the company delivered $8.8 billion, up 17% from Q1 2017.
One last important point is that COP is whittling down its long-term debt. In the most recent read, debt levels stood at $16.7 billion, which is a 34% reduction against the year-ago quarter.
#4 Oil Stocks to Buy: China Petroleum & Chemical Corp (ADR) (SNP)
The on-again, off-again drama surrounding the China trade war makes any investment in that region suspect. However, when it comes to oil stocks, the numbers don’t lie. With a market cap over $130 billion, China Petroleum & Chemical Corp (ADR) (NYSE:SNP) is one of the biggest energy companies in the world.
Presently, SNP absorbed a sizable hit on Wednesday, down 4% against the prior session. However, on a YTD basis, the picture is much more favorable — up a blistering 32%. If you’re looking for a major oil firm with room to grow, SNP stock is compelling, especially on this discount.
Like other oil and energy firms, SNP shifted its focus on recovery, and it’s paying huge dividends. Last fiscal year, China Petroleum delivered nearly $358 billion in revenues. This was up a whopping 28% against the prior year and over 14% from 2015 results.
The recovery story is still in play, with Q1 turning in sales of $98.3 billion, up over 16% YOY.
#5 Oil Stocks to Buy: Royal Dutch Shell plc (ADR)
Headquartered in The Hague, Netherlands, Royal Dutch Shell plc (ADR) (NYSE:RDS.A, NYSE:RDS.B) levers one of the most recognizable brands in the world. Also, with a market cap of just under $296 billion, Shell occupies an elite status among oil stocks.
Better yet, RDS.A shares are living up to that hype. With a YTD performance of 8%, Shell is one of the best performing oil stocks with a market cap exceeding $200 billion. Since closing at a year-low of $61.06, RDS.A has jumped up over 16%. This is true despite taking a good-sized tumble for Wednesday’s session.
But in my opinion, it’s the fundamentals where Royal Dutch Shell really shines. For fiscal 2017, the oil company delivered revenues of $305.2 billion — up nearly 31% against the prior year. Also, the haul represented over a 15% lift from 2015 results.
In its most recent quarter, Royal Dutch Shell brought home $89.2 billion in sales, an increase of 24.3% from Q1 2017.
#6 Oil Stocks to Buy: BP plc (ADR) (BP)
Outside of investment circles, the oil sector isn’t necessarily the most popular. Case in point is BP plc (ADR) (NYSE:BP), which has been embroiled in several controversies, most notably the Deepwater Horizon oil spill.
Just recently, some parts of its operation have temporarily halted due to the renewed Iran sanctions.
Logically, this latest news item may continue to pressure BP stock. Since peaking at $47.83 this year, BP lost nearly 3%. However, the British oil and energy company is up 13.6% YTD thanks to the robust underlying market. As such, investors have confidence that the firm will work out its troubles.
Moreover, management has found exceptional success in its financial recovery efforts. Last year, BP rang up $240.2 billion in sales, up more than 31% against the prior year. As well, 2017 revenues were up nearly 8% against 2015 results. For Q1 2018, the company saw revenues of $68.2 billion, up 22% YOY.
#7 Oil Stocks to Buy: EOG Resources Inc (EOG)
Often overlooked compared to the elite oil stocks, EOG Resources Inc (NYSE:EOG) is nevertheless a powerhouse in its own right. A market cap of $71 billion and an enterprise value of nearly $77 billion attest to that.
Another reason why you don’t want to ignore EOG stock is its performance. Simply put, this company is outshining most of its larger-capitalized peers. Shares are up 13.5% YTD; and against the beginning of March, EOG has gained 21%.
Just as importantly, management has delivered on its promises to revamp its financials. Last year saw EOG Resources ring up $11.2 billion in sales, which is a massive 50% higher from 2016 results. Not only that, 2017’s haul is up 29% over what EOG could muster in 2015.
Finally, EOG continues its fiscal hot streak, with a Q1 sales haul of $3.7 billion jumping 46.5% YOY. Management has also chipped away at its long-term debt exposure sequentially over the past five quarters.
#8 Oil Stocks to Buy: Anadarko Petroleum Corporation (APC)
One of the strongest names among mid-tier oil stocks, Anadarko Petroleum Corporation (NYSE:APC) is enjoying a stellar year in 2018. Since the January opener, APC shares have rocketed up over 30%. Moreover, a significant amount of the bullishness has occurred recently, with APC gaining 17% since the beginning of April.
What investors can appreciate, though, is that the optimism isn’t just based on technical sentiment. Revenue-wise, Anadarko hauled in more than $11.2 billion, a 30% increase against the prior year. Also, the result is 15.6% higher than 2015 sales.
In addition, APC has shifted toward being a leaner, meaner organization. Net income for 2017 was a $456 million loss, which is a big improvement over the $3 billion loss witnessed in 2016.
Challenges remain, but APC stock is a compelling buy opportunity, especially consideringt the underlying sector.
#9 Oil Stocks to Buy: Pioneer Natural Resources (PXD)
Another solid mid-tier oil producer, Pioneer Natural Resources (NYSE:PXD) is headquartered in Irving, Texas and has a market cap of $34 billion. Like virtually all other energy companies, PXD is rebounding from a sharp decline in oil prices.
With the resurgence in the underlying market, PXD stock is making the most of its opportunities. On a YTD basis, shares are up 14.6% despite suffering some nearer-term volatility. Its also clearing up some cobwebs from earlier in the year. Since the beginning of April, PXD gained nearly 17%.
But the biggest reason why investors should consider Pioneer Natural Resources is the fundamentals. The company delivered $5.3 billion in top-line sales last year, besting 2016’s result by nearly 51%. Not only that, against 2015’s haul, PXD is up nearly 84%.
Finally, Pioneer enjoyed a remarkable Q1, which generated $2.3 billion in sales. This was a massive 108% improvement over the year-ago quarter.
#10 Oil Stocks to Buy: Apache Corporation (APA)
If you’re looking for a solid, mid-tier oil producer with significant upside potential, consider Apache Corporation (NYSE:APA). With a $16.3 billion market cap and an enterprise value of nearly $25 billion, APA is a substantive opportunity.
That said, APA stock hasn’t enjoyed a great time this year. Against the January opener, APA stock is up less than 1%, underperforming many other oil stocks. However, this could also be the prime chance to jump on a sector player that hasn’t witnessed enormous profitability.
When you look at the fundamentals, you have to like your chances here. Annual revenue growth is moving steadily along. Last year, APA brought in $5.9 billion in top-line sales, up nearly 10% from the year prior. For its most recent Q1 earnings report, the company delivered $1.73 billion, up over 14% YOY.
More importantly, management has focused on ridding itself of unnecessary expenses. As a result of their efforts, Apache returned to profitability last year.
APA stock is still a risk, but the company has set itself up for future success.
#11 Oil Stocks to Buy: Devon Energy Corp (DVN)
An independent oil and gas exploration company, Devon Energy Corp (NYSE:DVN) has incurred a choppy start to 2018. Although DVN stock is up slightly over 1% YTD, this performance overlooks the fact that by the end of March, shares were down nearly 24%. So can investors trust DVN?
Admittedly, Devon is a significant risk. However, I really dig that management has cleaned up its financials. For fiscal 2017, DVN rang up nearly $14 billion in sales. This represents a 35% gain from the prior year, and a 6% lift against 2015 results. Momentum is still strong, with Q1 delivering $3.8 billion in revenue, or 7.3% YOY improvement.
Furthermore, after two consecutive years in red ink, Devon returned to profitability in 2017. This was helped in large part to a significant improvement in gross margins. Also, long-term debt crept lower in Q1 2018.
#12 Oil Stocks to Buy: Hess Corp. (HES)
Let me say this straight off the top: oil exploration company Hess Corp. (NYSE:HES) is a speculation play. Specifically, buyers will be gambling on Hess being able to clean up its financials, similar to its competitors.
Early signs are slightly mixed but encouraging. For instance, HES brought in nearly $5.5 billion in sales last year. This represented a significant 15% lift against the prior year. However, the 2017 haul is actually 18% lower from 2015’s revenue total. Also, HES incurred a disappointing loss of $4 billion in the bottom line last year.
Moving forward, I give the edge to the bulls. In Q1, Hess increased sales by 7% to $1.35 billion. Also, management substantially cut down operating expenses, delivering operating income of $94 million. In the prior-year quarter, HES incurred a $221 million loss.
Finally, Wall Street loves its chances betting on HES stock. On a YTD basis, Hess shares are up over 32%. Should you see any weakness, buying the volatility could be a shrewd move.
#13 Oil Stocks to Buy: Continental Resources, Inc. (CLR)
An oil exploration company that specializes in underdeveloped-acreage acquisitions, Continental Resources, Inc. (NYSE:CLR) is one of the more adventurous picks among oil stocks. Still, if you can stomach the volatility, CLR offers an intriguing play.
Last year, Continental Resources’ top-line sales hauled in $3.1 billion, up nearly 58% from one year prior. This figure was also up more than 16% from 2015 results, demonstrating firm progress on their recovery plan. Also, don’t overlook its recent Q1 2018 revenue performance, which jumped 66.5% YOY to $1.14 billion.
Perhaps the one significant knock on CLR stock is that the exploration company has already performed lights-out this year. From January’s opening session, CLR has gained an impressive 26.7%.
Nevertheless, I like Continental Resources’ chances moving forward. Management has zeroed in on financial controls, with gross and operating margins improving significantly. CLR is an organization that’s well setup to advantage any tailwinds in the energy sector.
#14 Oil Stocks to Buy: Concho Resources Inc (CXO)
Headquartered in Midland, Texas, Concho Resources Inc (NYSE:CXO) is the epitome of the good ole Texas oil company. Exclusively focused on the famous Permian Basin, Concho acquires acreage positions, as well as integrates advanced technologies to improve production.
Similar to so many oil stocks, CXO suffered sharply when the energy sector collapsed in 2014. Nevertheless, management has been determined to get back on the road, and their recent performances prove it. Last year, Concho’s revenue rang up nearly $2.6 billion, representing a 58% YOY gain. Also, in Q1 2018, sales improved by nearly 55% against the year-ago quarter to $947 million.
Despite these impressive numbers, Wall Street remains unmoved. On a YTD basis, CXO stock is down almost 5%. However, I think this weakness presents a discounted opportunity. Concho is getting the job done financially, and broader market conditions are overall favorable toward oil stocks.
#15 Oil Stocks to Buy: Noble Energy, Inc. (NBL)
An independent energy company, Noble Energy, Inc. (NYSE:NBL) operates largely in top basins throughout the domestic market. However, Noble also has offshore operations in Israel, Equatorial Guinea and the Gulf of Mexico.
What makes NBL stock especially intriguing is that the company is a work in progress. Last year, its bottom line was a $1.12 billion loss. That said, management has been busy implementing fiscal discipline, improving gross and operating margins.
So far, the results are very encouraging. In Q1 2018, shareholders witnessed NBL 24% YOY revenue growth to nearly $1.3 billion. Thanks to the improving profitability margins, net income for the quarter was $574 million, up a massive 1,121% YOY.
Wall Street loves what they’re seeing, with NBL stock up over 26% YTD. While I wouldn’t necessarily chase shares up, any dips would offer great buying opportunities.
#16 Oil Stocks to Buy: Total SA (ADR) (TOT)
French multinational oil company Total SA (ADR) (NYSE:TOT) took a sizable hit mid-week, shedding 2.7%. Not only that, we may not be done witnessing volatility in TOT stock. But if that’s the case, you should consider picking some up once the price action stabilizes.
Even with the nearer-term struggles, TOT stock is up over 12% YTD. Furthermore, Total shares are riding a bullish trend channel that’s been in play since early 2016.
But the fundamental aspect is what I’m most excited about. For starters, Total has a market cap of nearly $168 billion. Yet despite its size, the company engages its recovery plan at a rapid pace. Last year, the company brought in sales of $149 billion, up 16.6% against the prior year. Also, 2017 results exceeded 2015 revenue by a 4% margin.
In the most recent quarterly earnings report, TOT generated $43.3 billion in sales, up 20% against the year-ago quarter. Additionally, management improved gross margins to 24.8%, up from 20.3% in Q1 2017.
#17 Oil Stocks to Buy: Petroleo Brasileiro (ADR)
Due to political instability and corruption, Brazilian companies usually carry risks not related to their business. Nevertheless, one can’t argue with Petroleo Brasileiro’s (ADR) (NYSE:PBR) searing performance in the markets.
Even with heavy losses against the middle of the month, PBR stock is up a massive 44.6% YTD. Currently, shares are riding a strong bullish trend channel in play over the trailing one-year period.
But it’s not just technical trading sentiment boosting PBR stock. Petroleo, or better known as Petrobras, has been bringing home the goods financially. Last year, sales registered nearly $89 billion, up 9% from a year ago. For its Q1 earnings report, Petrobras delivered just under $23 billion, a 5.6% improvement YOY.
Historically, one of the company’s weaknesses is the balance sheet. Management recognizes this issue and seeks to improve it. For instance, in recent quarters, the company has whittled down its long-term debt. In addition, Petrobras has a much more stable free cash flow position compared to a few years back.
#18 Oil Stocks to Buy: Marathon Oil Corporation
My InvestorPlace colleague Lawrence Meyers correctly called Marathon Oil Corporation (NYSE:MRO). Earlier this year, Meyers wrote that MRO stock “may have turned the corner.” A six-month price chart demonstrates just how accurate he was.
Since his article published, MRO stock is up over 13%. It wasn’t a pretty journey, as Marathon Oil can never produce an uneventful experience. But from the first of this month, the company just hasn’t looked back. While further volatility is almost guaranteed, I do like its overall chances.
Recently, Marathon Oil has put up strong numbers. Last year, total sales rang up nearly $4.4 billion, up 38% against 2016 results. For Q1 2018, the company brought home $1.44 billion in revenue, gaining over 45% against the year-ago quarter.
More impressively, management has made its business much more efficient. In the recently reported quarter, gross margins were 31%, which is substantially higher than the 13% gross margins for Q1 2017.
#19 Oil Stocks to Buy: WildHorse Resource Development Corp (WRD)
A mid-cap exploration and production company, WildHorse Resource Development Corp (NYSE:WRD) is on the speculative side of things. With an initial public offering back in late 2016, WRD stock hasn’t proven itself like the other names on this list.
Moreover, WildHorse has definitely enjoyed a wildly profitable time in the markets this year, gaining a massive 46%. Against its IPO price, shares are up over 79%. Thus, some investors may be reluctant to jump into a company that has gained so much so quickly.
However, speculators should consider that WildHorse is on a tear fundamentally. Over the last four years, WRD averages a whopping 124% annual returns. Furthermore, we see zero evidence of momentum slowing down. In Q1, the company generated $217.5 million in sales, up a blistering 303% against the year-ago quarter.
#20 Oil Stocks to Buy: Lonestar Resources US Inc (LONE)
Rounding off the list of oil stocks to buy is Lonestar Resources US Inc (NASDAQ:LONE). With a market cap of only $170.5 million, Lonestar is the smallest player here. However, it carries an outsized punch.
That’s because fundamentally, Lonestar has promising metrics. First, its revenue haul for 2017 totaled $94.1 million, which was up over 18% from a year ago. In Q1, the company achieved $36.7 million in sales, improving nearly 109%.
While it’s not the end-all, be-all, potential buyers should look into insider transactions. Since mid-April of this year, upper management took significant positions in Lonestar’s stock.
On a YTD basis, LONE stock is up an astonishing 72.6%. Granted, that gives pause to many investors who don’t want to hold the bag if things get volatile. While I personally wouldn’t buy at this level, any dips should warrant a closer examination.
As of this writing, Josh Enomoto did not hold a position in any of the aforementioned securities.