Investors who have held energy stocks or commodities-related stocks over the past two years have done tremendously well. Indeed, last year would have been among the most difficult times to invest in these asset classes.
Commodities prices had crashed, as the supply and demand outlook for anything commodities-related appeared to be dismal.
Fast forward not even two years later, and the outlook has changed substantially.
We’ve gone from what was expected to be a perma-glut of energy and commodities, to an inflationary environment with supply chain issues (too much demand).
New supply has been relatively slow to come back on line as energy companies look to use their assets to the best of their abilities. Also, pipeline capacity remains constrained, making substantial supply increases difficult.
On top of this, demand remains red-hot for energy stocks, particularly as we head into what could be a cold winter. For those in the commodities space, this is a great thing.
Of course, some corners of the commodities sector have done better than others. Energy stocks have been among the best-performing equity groups, as crude oil prices have taken off.
Currently trading at around $80 per barrel, crude oil producers are the key beneficiaries of this higher-price environment.
However, picking any old energy stock isn’t necessarily a good plan. Here are a few of the top global energy stocks I think are worth looking closely at right now:
- TotalEnergies (NYSE:TTE)
- Petroleo Brasileiro (NYSE:PBR)
- Apache Corporation (NASDAQ:APA)
- Royal Dutch Shell (NYSE:RDS.A, NYSE:RDS.B)
- Chevron (NYSE:CVX)
- BP (NYSE:BP)
- National Fuel Gas (NYSE:NFG)
Top Energy Stocks to Buy: TotalEnergies (TTE)
In the energy sector, venturing outside of the United States can be a good thing. This is a global market filled with great opportunities all around the world.
TotalEnergies is a company I’ve recently started looking at. TotalEnergies is based out of France and is one of the leading refining companies in Europe.
Currently, the company has a collective capacity of approximately 3 million barrels of oil a day. The products refined by TotalEnergies include not only petroleum products but also specialty chemicals. Accordingly, this isn’t a simple, one-trick pony.
TotalEnergies is also a company with an upstream portfolio, providing stability within the company’s value chain.
As a result of being an integrated energy player, investors in TTE stock benefit from the company’s margins overall, which tend to be higher than its European peers.
This is a company that has also aggressively invested in advanced technology, to help spur margins over time.
Currently, TotalEnergies trades at around 12-times earnings and pays out an impressive dividend yield of 6.6%. For long-term investors seeking growth and income potential, this is certainly a great option to consider right now.
Petroleo Brasileiro (PBR)
Another global energy stock I’ve had my eye on of late is Brazilian oil and gas company Petroleo Brasileiro.
As the energy company of the Brazilian government, this is a unique publicly-traded option for investors. The company’s integrated operations include 13 refineries in Brazil, as well as onshore and offshore oil exploration and development.
This is a company with a combined production capacity of around 2.2 million barrels per day. Accordingly, this is one of the energy stocks I’ve had my eye on as a potential growth company in this heightened commodity price environment.
For Latin America, Petroleo Brasileiro is one of the top suppliers of petroleum and petroleum-related products. Geographically speaking, this is a high-growth area with lots of potential.
This company’s recent earnings came in much better than expected. Revenue grew by more than 70%, with net income surging to %5.3 billion, compared to a loss of $277 million in the prior year-ago period. That’s some impressive performance.
Top Energy Stocks to Buy: Apache Corporation (APA)
One of the mid-cap energy stocks in the U.S. I’ve also had my eye on of late is Apache.
Investors in APA stock have certainly been rewarded since the depths of the pandemic.
However, zooming out and looking at this company’s longer-term stock chart, it’s clear that Apache has a long way to go to get back to pre-pandemic highs.
This sort of capital appreciation potential is enticing for value investors. Apache is a company with crude oil, natural gas, and liquids operations.
Accordingly, this $9.5 billion market cap energy stock is one with diversified exposure to the commodities rally we’ve seen of late. Indeed, Apache is also diversified geographically as well.
This is a company with operations in the Permian Basin, as well as Egypt and the North Sea. Wherever there’s value to be had, Apache appears to be willing to go there.
The company’s recent significant discoveries in the Alpine High region of the Delaware Basin and in Suriname are catalysts many growth investors point to as reasons to own this stock.
The company’s revenue surged by 83%, propelled by strong production and global energy demand.
On these results, the company raised its dividend, nearly doubling its distribution for investors.
I think more dividend hikes could be coming, and this is a stock that provides impressive potential upside here.
Royal Dutch Shell (RDS.A, RDS.B)
One of the largest energy companies in the world, Shell is among the top picks of many investors looking for stable energy exposure.
While this company’s focus is in Europe, Shell’s reach spans North America, Europe, Africa, Asia, and Oceania. Indeed, with annual revenue of more than $180 billion and daily production of around 3.4 million barrels of oil, it doesn’t get much larger than Shell.
Unfortunately, like some of the other companies on this list, Shell hasn’t fully participated in this last rally.
Sure, the company’s share price has taken off from its pandemic-induced trough. However, this company’s stock price also remains well off of its pre-pandemic highs.
This is also a company with a dividend yield of around 3.8% at the time of writing. For any investor seeking bond-like yield, that’s attractive.
Shell has been under pressure to reduce emissions and has been making headway in this regard.
However, as a medium-term holding, this is a company with a dividend yield and growth trajectory worth considering. Accordingly, this is one of the top energy stocks on my watch list right now.
Top Energy Stocks to Buy: Chevron (CVX)
Another global juggernaut as far as energy stocks go, Chevron remains a top holding of many prominent investors. Warren Buffett has been among the most high-profile accumulators of CVX stock of late.
Any stock Warren Buffett likes is one value investors are bound to consider. Indeed, this energy company is a doozy, with the size and scale to make any large-cap investor excited.
Currently, Chevron is the second-largest oil company in the U.S. However, this company also produces fuel, lubricants, petrochemicals, additives and other products that have increased in value of late.
This inflationary environment could turn out to be a good one for Chevron, as investors look for ways to benefit from rising prices across the value chain.
Of late, Chevron has posted some very good numbers. At least right now, Mr. Buffett is looking like he made a pretty good bet.
The company’s latest financial reports suggest there’s a strong growth trend with this company. Chevron’s Q3 revenues surged more than 80% on a year-over-year basis, to hit $44.7 billion. Earnings per share came in at $2.96, higher than many analysts predicted.
Right now, Chevron stock also provides investors with a very lucrative dividend yield of 4.8%.
This is a company certainly worth considering from a total return perspective. Right now, I think Mr. Buffett hit the nail on the head with respect to Chevron’s risk-adjusted returns from this portfolio addition.
BP remains one of the global giants, as far as energy stocks go.
With daily production of approximately 1.9 million barrels of oil, this is a company worth considering from a production standpoint.
However, like many of the other companies on this list, BP is also heavily vertically integrated. This is a company with upstream, midstream and downstream operations.
Accordingly, investors in BP are able to capture much of the value that’s lost by pure-play energy stocks focusing on any one of these given areas.
BP has been pushing to increase production recently, a move which has clearly benefited shareholders.
the company expects to push its oil production higher to the tune of 200,000 barrels per day via bringing eight new projects online. That’s significant, especially given how quickly oil prices have risen of late.
This company is also one that’s making a push toward renewable energy. BP has stated the company’s aim is to have approximately 50 GW of renewable energy by 2030.
That’s a desirable target for investors unsure about the fossil fuels sector. Currently, the company produces approximately 2.5 GW of energy annually.
Additionally, BP pays investors a dividend yield of 4.9% currently. This is one of the highest yields on the list. For those seeking not only growth but income over time, this is a stock to consider right now.
Top Energy Stocks to Buy: National Fuel Gas (NFG)
Finally, we have US-based National Fuel Gas. This diversified energy company focuses on the exploration, storage and supply of natural gas. The largest segment of this company is exploration and production, which generates almost half of its earnings.
The global natural gas market has remained largely unaffected by the headwinds of the pandemic.
Moreover, the natural gas market has become tight this year, which led to a 7-year high rally in natural gas prices. This has proved to be highly beneficial for energy firms like NFG.
For the third quarter, NFG upped its production by 48% compared to the prior-year period.
The adjusted operating earnings were 93 cents for each share exceeding analyst estimates of 86 cents. GAAP earnings stood at 94 cents per share as compared to 47 cents in the previous year period.
NFC stock offers a decent dividend yield of around 3.2%, which is set to grow as income and cash flow improves. Accordingly, this is a stock I’m watching closely right now.
On the date of publication, Chris MacDonald did not have (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.
Chris MacDonald’s love for investing led him to pursue an MBA in Finance and take on a number of management roles in corporate finance and venture capital over the past 15 years. His experience as a financial analyst in the past, coupled with his fervor for finding undervalued growth opportunities, contribute to his conservative, long-term investing perspective.