7 of the Hottest Energy Stocks to Buy This Summer


energy stocks - 7 of the Hottest Energy Stocks to Buy This Summer

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It doesn’t take a PhD in economics to know that energy prices — and energy stocks — are coming back strong. That’s directly linked to the post-pandemic recovery and it will be a significant trend as we move forward.

As the world reopens, there are different forces at play in the energy patch. Russia is using its natural gas exports as a political tool again. China is seeking its own energy solutions and the Middle East is hedging its bets as it looks for its best customers in the next decade and beyond.

Also, renewables have become a big deal. There’s the ESG (environmental, social, governance) movement that’s encouraging greener thinking (and doing). There’s more interest in electric vehicles (EVs) and hydrogen as less carbon-dense alternatives to fuel.

But the fact is, right now, the world is powered by oil. That may change, but it’s not like flipping a light switch. As we transition, companies in the oil patch still have legs. And these are the seven hottest stocks in the energy patch now:

  • Continental Resources (NYSE:CNR)
  • Canadian Natural Resources (NYSE:CNQ)
  • Devon Energy (NYSE:DVN)
  • Diamondback Energy (NASDAQ:FANG)
  • Hess Corp (NYSE:HES)
  • Imperial Oil (NYSEAMERICAN:IMO)
  • PetroChina (NYSE:PTR)

Energy Stocks: Continental Resources (CNR)

Image of an oil filed at the Permian Basin.

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This is a good time for exploration and production (E&P) companies. They’re the ones that are actually finding and producing the oil and natural gas to ship to market.

E&P firms live a cyclical existence. When demand is strong, their businesses boom. When demand is low, they struggle to produce energy above breakeven. Demand is high now and CNR is a revived energy stock.

CNR ships both oil and natural gas from some of the most productive energy patches in the U.S. It has about 60/40 mix between oil and natural gas.

The company has been around since 1967, so it has seen its fair share of wild energy markets. And it has continued to prosper.

Right now, the stock is up 95% year to date, yet still has plenty of room to grow before getting close to its 2018 highs.

It holds a Portfolio Grader ‘B’ rating.

Canadian Natural Resources (CNQ)

A magnifying glass zooms in on the website for Canadian Natural Resources (CNQ).

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Since the early 1970s, CNQ has been a player in the Canadian E&P sector. It’s the largest independent natural gas producer in Western Canada, as well as one of the leading heavy crude producers.

But its E&P projects don’t end at the Canadian border. It also has wells in the North Sea as well as offshore operations in Cote d’Ivoire and Gabon in Africa. CNQ also owns two pipeline companies, which diversifies its revenue since pipeline (aka, midstream) companies charge by volume, so they’re disconnected directly from the price of what’s flowing through their pipes.

With a $42 billion market cap, this is a serious player among energy stocks. It’s up 48% year to date and still delivers a generous 4.3% dividend.

It holds a Portfolio Grader ‘B’ rating.

Energy Stocks: Devon Energy (DVN)

A sign for Devon Energy (DVN) out front of a company office in Calgary, Canada.

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Another Oklahoma-based E&P firm, DVN has properties across the U.S., in some of the most energy-rich basins in the U.S. It has been in the energy business since 1971, so it’s also a veteran player that has learned how to manage the highs and lows in energy stocks.

DVN remains well off its 2018 highs, so its 80% year to date performance is impressive, but it also shows how low the stock has been trading in a weak energy market. With a nearly $20 billion market cap, DVN has the size to endure bad times and the ability to ramp up quickly in good times.

It holds a Portfolio Grader ‘B’ rating.

Diamondback Energy (FANG)

diamondback energy logo on its website to represent oil stocks

Source: Pavel Kapysh / Shutterstock.com

In December 2007, FANG bought more than 4,000 acres of land in the oil-rich Permian Basin. That was the start. Since then, it has added to its portfolio with acquisitions of new properties and companies in the basin.

It also has a midstream business. It runs pipelines in the Midland and Delaware basins. That’s a great revenue boost, especially when energy demand is growing.

FANG is up 91% year to date, with a 1.7% dividend. Bear in mind, this energy stock’s 52-week high and low range from 23 to 95. That’s an enormous swing, which shows you why the ride during good times is so significant, and volatile.

Energy Stocks: Hess Corp (HES)

Hess (HES) logo on a phone screen

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While its roots extend back to the good ol’ days of the global oil industry in 1919, HES has transformed in the past decade from an integrated oil and gas company to its current E&P operation.

By 2014, it had sold off its refineries, gas stations, energy marketing business and its storage and terminals divisions. With a $27 billion market cap, it’s a large player in the E&P space and has a significant pedigree among energy stocks.

The stock is up 63% year to date and after all the commotion transitioning in the past few years, it’s finally operating in a bull market with all cylinders firing.

It holds a Portfolio Grader ‘B’ rating.

Imperial Oil (IMO)

Image of an oil wells with a dark blue sky

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When you think of legacy energy stocks in North America, it’s a good bet that IMO doesn’t show up on that list.

Launched in 1880, this integrated (E&P, pipeline, and refining/distribution) energy company is a major player in the Canadian oil sands as well as E&P work above the Arctic Circle. It’s also an interesting side wager on ExxonMobil (NYSE:XOM), since it’s a majority shareholder of IMO.

And that shouldn’t be surprising, since when IMO was launched it was focused on being the Canadian Standard oil, which eventually became XOM. And now that effort has gone full circle.

It’s a good-sized stock — $24 billion market cap — that’s up 61% year to date. And its majority shareholder will make sure it has the support it needs now and in the future.

It holds a Portfolio Grader ‘B’ rating.

Energy Stocks: PetroChina (PTR)

close up of oil pipelines at sunset

Source: Shutterstock

The list wouldn’t be complete until we addressed China’s rising demand for energy and its local energy stocks. The top choice here is PTR, Asia’s largest oil and natural gas producer.

Currently, it focuses on E&P, refining and marketing oil and natural gas and their derivatives. It trades in the U.S. markets with an American Depositary Receipt that represents its Chinese shares. And its current market cap of $144 billion makes it a significant player in the global energy patch.

In recent years some of its expansion has drawn criticism for overlooking civil rights in some countries and the growing anti-China sentiment in the U.S. also adds to a certain level of long-term risk.

However, the stock is up 58% year to date, provides a 4.7% dividend and still trades at a price-to-earnings ratio below 10x. Those are some pretty compelling numbers.

It holds a Portfolio Grader ‘B’ rating.

On the date of publication, Louis Navellier has no positions in any stocks in this article. 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. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.

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