7 Top-Rated Energy Stocks to Fill Up Your Portfolio

energy stocks - 7 Top-Rated Energy Stocks to Fill Up Your Portfolio

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Energy stocks have taken off this year, due in large part to the demand let loose as the pandemic relented. That relief also meant the U.S. dollar continued its climb, and that meant higher oil prices since oil is priced in dollars.

Add to that OPEC’s unwillingness to put more oil into the markets and you have quite a wild scenario. Average gas prices in January 2021 were $2.40 per gallon. On December 3, 2021 that average gas price was $3.37 a gallon. That’s a substantial rise in a short period of time.

I’ve been talking about this very subject long before the price rises began, and many energy stocks have done well since then. But there’s still time to add energy stocks to your portfolio.

We’re likely to see more volatility in 2022, but the trend will continue up and to the right. Omicron is unlikely to shut down the economy as the first Covid wave did in 2020. And even if the economy slows for a quarter or two, we have seen this year what the rebound effect looks like. Below are some great picks still worth your consideration.

  • Callon Petroleum (NYSE:CPE)
  • Flex LNG (NYSE:FLNG)
  • Imperial Oil (NYSEAMERICAN:IMO)
  • Magnolia Oil & Gas (NYSE:MGY)
  • Marathon Oil (NYSE:MRO)
  • Matador Resources (NYSE:MTDR)
  • Oasis Petroleum (NASDAQ:OAS)

Energy Stocks to Buy: Callon Petroleum (CPE)

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There are a lot more companies in the energy patch that you would imagine. We’re used to most of the downstream names where we fill up our vehicles. But there are plenty of other companies involved long before we put a nozzle in our tank.

The upstream companies that do the exploration and production (E&P) work of finding and getting the natural gas and oil out of the ground are plentiful. CPE is one of them. And it has been in the business since 1950.

That means it has seen plenty of ups and downs and has built a business model that is able to withstand the gyrations of the energy markets.

CPE has a market cap of just under $3 billion and it’s rebounding from pandemic lows. E&P companies are more leveraged to the price of oil than midstream and downstream players. They’re hit hard when prices drop but soar when prices rise. CPE stock has risen 290% year-to-date, with more upside to come.

This stock has an ‘A’ rating in my Portfolio Grader.

Flex LNG (FLNG)

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Liquified natural gas (LNG) is growing in global demand. The U.S. has some of the richest natural gas reserves in the world and Japan and Europe are paying prices for natural gas that are multiples of natural gas prices in the U.S.

That makes for a substantial business opportunity for LNG shipping companies like FLNG. Even now, Europe is being held hostage by Russia’s natural gas pipeline into Europe and European nations are increasingly looking for options. FLNG has one of the most modern fleets in the world and its fifth generation ships have more capacity than older LNG fleets.

This is a significant long-term opportunity for U.S. natural gas and LNG shipping companies. FLNG stock has risen 140% YTD, yet it’s still a relatively small company with a $1.2 billion market cap. Also, it has a massive dividend of nearly 14%, but it’s volatile. Buy this one for the growth.

This stock has an ‘A’ rating in my Portfolio Grader.

Energy Stocks to Buy: Imperial Oil (IMO)

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Since 1880, IMO has been a leading player in Canada’s energy markets. With a $23 billion market cap, it’s Canada’s second-largest oil company. Today, Exxon Mobil (NYSE:XOM) owns a 70% stake in IMO.

That means investors are getting an indirect play into one of largest integrated oil companies in the world while also taking advantage of a dominant Canadian energy company. Integrated energy companies are completely integrated from E&P to pipelines to refineries to retail operations. They generally don’t have the huge growth that niche players do, but they offer more stability.

IMO stock has gained 84% YTD, but its earnings will continue to rise as demand increases. It also has a 2.3% dividend.

This stock has an ‘A’ rating in my Portfolio Grader.

Magnolia Oil & Gas (MGY)

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A relative newcomer to the E&P scene, MGY operates in South Texas out of the Eagle Ford Shale and other areas. For a young company — founded in 2018 — it has a sizable market cap of more than $4 billion.

And it’s already profitable, even during some challenging times for U.S. E&P firms. But Eagle Ford is a very busy place these days and as energy demand grows, so will the demand for energy stocks like MGY.

MGY stock has gain 178% YTD, but trades at a current price-to-earnings ratio of just 11x. The fact that it has positive earnings this early in the cycle is an impressive fact that not all its competitors can lay claim to. Its early success should translate into long-term success.

This stock has an ‘A’ rating in my Portfolio Grader.

Energy Stocks to Buy: Marathon Oil (MRO)

Marathon Oil (MRO) gas station carport on sunny day with blue sky background

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With a market cap nearing $12 billion, MRO is one of the bigger independent E&P firms in the world.

Most of its operations are in the U.S. shale fields but it also has operations in Equatorial Guinea as well. There are very positive signs that the latter has some great, untapped opportunities and MRO has a front row seat expanding those opportunities.

MRO’s roots go back to late the nineteenth century when John D. Rockefeller was building his Standard Oil. But that longevity brings along with it proof that MRO has been through plenty and emerged stronger for it.

MRO stock is up 140% YTD and its earnings are just turning around. If E&Ps are strong energy stocks, MRO will be the bellwether of the bunch.

This stock has an ‘A’ rating in my Portfolio Grader.

Matador Resources (MTDR)

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MTDR is one of the more interesting energy stocks here because it’s more than an E&P play but less than an integrated oil. Basically, that means it has some midstream assets as well as E&P operations.

Midstream companies are fundamentally pipeline operations. And pipelines are more demand-based than price-based for their revenue. That means they get paid for the quantity that gets sent through their pipes rather than the cost of the energy. That helps keep its upstream operations more profitable since it runs its own pipelines and has much more control over midstream pricing than a third party would.

MTDR stock has a $4.4 billion market cap and it’s up a whopping 220% YTD. Yet it currently trades at a P/E of 16x. There’s plenty more gas left in this stock’s tank — and in its pipes.

This stock has an ‘A’ rating in my Portfolio Grader.

Energy Stocks to Buy: Oasis Petroleum (OAS)

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OAS is similar hybrid play like MTDR, but about half the size by market cap. That means there’s more upside performance in a bull market. But it also means more downside velocity in a weakening market.

But that’s the nice thing about having the midstream operations. They are a good transitional piece that slightly dampens volatility, especially for the natural gas pipeline. Natural gas is less affected than oil when it comes to demand. Most of the natural gas supplies are for utilities and industrial use, and now exports, too.

Not surprisingly, OAS stock has outperformed MTDR slightly, rising 223% YTD. Yet it’s P/E is less than 3x and it still provides a decent 1.7% dividend.

This stock has an ‘A’ rating in my Portfolio Grader.

On the date of publication, Louis Navellier has no positions in 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.

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