Given the dramatic paradigm shifts that occurred in the energy space, investors need to focus on no-brainer energy stocks to buy for 2023 and beyond. Fundamentally, Russia’s brazen war in Ukraine poses arguably the biggest challenge due to its hydrocarbon outflow cuts. As well, the cartel OPEC+ recently declared significant oil production cuts, thus limiting supply to boost demand.
To be fair, the main wildcard that investors of energy stocks to buy must watch out for is the Federal Reserve. With the central bank committed to tackling inflation via raising the benchmark interest rate, the subsequent monetary tightening could hurt demand for energy resources and other commodities.
Still, the full normalization represents a major countervailing wildcard. In addition, the global population continues to rise and as economies develop, their consumption rises as well. Therefore, on a net basis, investors should zero in on no-brainer energy stocks to buy.
Headquartered in San Ramon, California, Chevron (NYSE:CVX) is one of the supermajors, another name to describe a member of big oil. Currently, Chevron features a market capitalization of $359.1 billion. On a year-to-date basis, CVX gained a staggering 55.6% of equity value. While some folks may be leery of buying into strength, Chevron brings plenty of fundamental might to the table.
Significantly, Chevron is involved in every component of the hydrocarbon space: upstream (exploration and production), midstream (storage and transportation) and downstream (refining and marketing). Although political dynamics emphasize pivoting toward clean energy, the hydrocarbon industry will likely remain relevant for a long time. Therefore, CVX is worth consideration for energy stocks to buy for the long haul.
On the financials, Chevron benefits from a stable balance sheet. Currently, its debt-to-EBITDA is 0.37 times, favorably below the industry median of 1.77 times. Also, its Altman Z-Score stands at 3.7, reflecting lower-than-average bankruptcy risk over the next two years.
Founded in 1907 and based out of the U.K., Shell (NYSE:SHEL) is one of the world’s biggest energy stocks to buy. At the moment, the company carries a market cap of $200.39 billion. Since the start of this year, SHEL gained over 27% of equity value. Notably, the security picked up over recent sessions, gaining over 11% in the trailing month.
Fundamentally, Shell brings a diversified picture to the table. Not only does the company deliver hydrocarbon products, Shell will build Europe’s largest renewable hydrogen plant in the Netherlands. Since Russia’s invasion of Ukraine, European leaders scrambled for hydrocarbon alternatives. Theoretically, then, this wider sentiment shift should prove a net positive for SHEL.
Financially, Gurufocus.com identifies Shell as a modestly undervalued market idea. Currently, SHEL trades for 5.35 times forward earnings. In contrast, the industry’s median forward price-earnings ratio is 7.14 times. Thus, it’s one of the stalwarts among energy stocks to buy that you can pick up for a discount.
Cheniere Energy (LNG)
Headquartered in Houston, Texas, Cheniere Energy (NYSEAMERICAN:LNG) specializes in liquefied natural gas. According to the Department of Energy, the “volume of natural gas in its liquid state is about 600 times smaller than its volume in its gaseous state, making it easier for ocean transport.” You can see where I’m going with this based on the context.
Still, let’s discuss some quick facts. Currently, Cheniere commands a market cap of $42.6 billion. It’s a massive winner in the charts, skyrocketing over 66% YTD. To be fair, the company could use some shoring up of its financials. For instance, its Altman Z-Score of 0.87 indicates a distressed organization. On paper, then, Cheniere may face bankruptcy risk over the next two years.
Nevertheless, investors must consider the bigger picture. With the Russians no longer providing cheap natural gas to Europe, the region must look for alternatives. While Cheniere by itself is no panacea, it’s certainly part of the discussion. Given Russia’s apparent war crimes, it’s politically unpalatable for European nations to welcome the belligerent power into the international community.
Southwestern Energy (SWN)
Also headquartered in Texas, Southwestern Energy (NYSE:SWN) is a natural gas exploration and production company. As mentioned above, the push for non-Russian sources of hydrocarbons should bolster SWN, making it one of the energy stocks to buy for the long haul.
Presently, Southwestern commands a market cap of just under $8 billion. Since the beginning of this year, SWN gained almost 56% of equity value. As well, shares have picked up momentum in recent sessions. Over the trailing five days since the close of the Nov. 7 session, SWN gained nearly 4%. In the trailing month, shares swung higher by over 8%.
Regarding the financials, Southwestern’s claim to fame centers on its discounted proposition. Per Gurufocus.com, SWN prices at just over 4-times forward earnings. In contrast, the forward P/E ratio of the underlying sector is 7.14 times. As well, Southwestern enjoys strong profitability margins. Its operating margin stands at 50.2%, beating out 88% of its rivals.
Enphase Energy (ENPH)
Headquartered in Fremont, California, Enphase Energy (NASDAQ:ENPH) is an American energy technology firm. Specifically, it develops and manufactures solar micro-inverters, battery energy storage and electric-vehicle charging stations primarily for residential customers.
Currently, Enphase commands a market cap of $37.78 billion. Since the Jan. opener, ENPH gained nearly 46% of equity value. Notably, in the trailing half-year period, ENPH skyrocketed almost 79%. To be clear, Enphase is a highflier. At the same time, it deserves the momentum based on rising costs of energy. As well, power grid stability has become a major concern for many households.
From a financial perspective, ENPH appears incredibly overvalued. For instance, ENPH trades at 56-times forward earnings. At the same time, Enphase also offers excellent revenue growth and profitability margins. For risk-takers, this name could make sense among the energy stocks to buy based on increasing fundamental relevance.
Moving into the more speculative market ideas among energy stocks to buy, we have Ormat (NYSE:ORA). Headquartered in Reno, Nevada, Ormat supplies alternative and renewable geothermal energy technology. Scientifically, geothermal energy presents an attractive profile since the earth’s core provides practically limitless power potential.
At the moment, Ormat features a market cap of $5.65 billion. Since the beginning of the year, ORA gained a very healthy 28.5%. Further, the underlying business benefits from near-term momentum. In the trailing five-day period, ORA moved up nearly 11%. During the trailing month, shares gained almost 20% of equity value.
Before prospective investors jump onboard Ormat, they should look at the financials. Frankly, there’s some work to be done here, which is why I mentioned its speculative nature upfront. Plus, Gurufocus.com labels ORA as a significantly overvalued investment.
Still, what draws me to Ormat is that it could very well represent the future of energy. Geothermal’s capacity factor is second only to nuclear energy. Thus, ORA is worth keeping tabs on regarding energy stocks to buy for the long haul.
NuScale Power (SMR)
Headquartered in Oregon, NuScale Power (NYSE:SMR) easily represents in my opinion one of the no-brainer energy stocks to buy. The company specializes in small modular reactors or SMRs. These facilities feature a physically smaller footprint, enabling much wider integration geographically speaking. NuScale’s SMRs also incorporate the latest safety mechanisms, providing worry-free nuclear energy.
Currently, NuScale commands a market cap of $2.58 billion. Since the start of the year, SMR stock gained almost 15%. As a gut reaction, that’s a nothing burger. With NuScale’s potential ability to deliver power supplies closer to the source of demand – think edge computing but with nuclear energy – SMRs can radically change the industry’s paradigm, this time for the better.
For a deeper look into the potential upside opportunity with SMR stock, I’ll shamelessly plug my TipRanks article on the topic. One major highlight to consider, though, is that SMRs can facilitate previously economically restrictive endeavors such as desalination; that is, converting ocean water into a drinkable format.
On the date of publication, Josh Enomoto 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.