The outlook for oil and natural gas has gotten cloudy. After rising above $90 a barrel earlier this fall, prices fell back to $75 and are now hovering near $80 for a barrel of crude oil. The clean-energy sector looks even worse, with demand and prices collapsing in recent months. In this uncertain environment, the share prices of many companies have fallen to 52-week lows or lower and investors seem to be avoiding any securities tied to energy right now. While oil-producing nations have cut back production, global demand has weakened with an economic slowdown in China. War in the Middle East has further complicated forecasts and hurt investor sentiment. Here are three energy stocks you should avoid like the plague.
Suncor Energy (SU)
Suncor Energy (NYSE:SU) is trying to resolve several problems, including safety issues at its production sites, executive departures and a cyberattack that crippled its retail gas stations. The company’s recent third-quarter earnings report showed the company is making some progress, but not enough to make SU stock a buy right now. The Canadian oil producer posted adjusted earnings of CAD 1.98 billion, or CAD 1.52 per share, ahead of analyst expectations of CAD 1.36 but down 19% from CAD 1.88 a year ago.
Suncor blamed the decline on lower crude oil prices, increased royalty payments and decreased sales. The company’s upstream production of 690,500 barrels of oil equivalent per day (boepd), was down 5% year-over-year from 724,100 boepd. Refinery utilization in Q3 also declined, falling to 99% from 100% in the same period of 2022.
SU stock is up 10% this year but flat over five years.
ChargePoint (CHPT)
Shares of electric-vehicle charging station company ChargePoint (NYSE:CHPT) dropped 11% after the company issued its Q2 quarterly earnings. Year-to-date, ChargePoint’s shares are down 70% and now trading in penny stock territory. In the past 12 months, the stock has collapsed 80%. The share price implosion comes as demand for electric vehicles slumped, forcing automotive companies to slash prices to boost sales. ChargePoint has also been hurt by a slow rollout of electric vehicle infrastructure.
For its most recent earnings, ChargePoint reported a loss of 35 cents a share on revenue of $150.5 million. A year earlier, ChargePoint reported a loss of 27 cents a share on sales of $108.3 million. Wall Street had a loss of 13 cents a share and $153.2 million in sales penciled in for the company. The guidance also came in weak. For the full year, ChargePoint expects sales to come in between $605 million and $630 million. Wall Street was expecting sales of $667 million. ChargePoint next reports earnings on Dec. 7.
British Petroleum (BP)
Oil major British Petroleum (NYSE:BP) reported pretty disastrous third-quarter results, with its profit declining 60% from a year earlier and badly missing Wall Street forecasts. The global energy giant announced a Q3 profit of $3.3 billion, down from $8.1 billion in the same quarter of 2022. Analysts forecasted BP would announce a Q3 profit of $4 billion. The London-based oil company attributed the profit decline to weak gas marketing and poor trading results.
BP also recorded an impairment charge of $1.2 billion, including a pre-tax charge of $540 million related to offshore American wind projects. Not only did the company report poor results, but the profit decline also came weeks after the sudden exit of CEO Bernard Looney, who resigned after admitting to past relationships with colleagues. After Looney’s resignation, BP’s U.S. Chief Dave Lawler also abruptly left the company without explanation. BP’s stock is up 2% this year but down 14% over five years.
On the date of publication, Joel Baglole 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.
