The global energy industry presents incredibly wide opportunities. Companies in this sector often work in producing and distributing various types of energy, including fossil fuels and renewable energy. More specifically, they encompass a broad range of sources such as crude oil, natural gas, solar, wind and nuclear power, each with varying growth drivers and catalysts.
Energy stocks often experience significant fluctuations in value, similar to the volatility seen in the tech sector. It’s a sector that experiences high trading activity during periods of surging oil prices or increased geopolitical tensions. This is due to the potential for highly volatile prices, which attracts traders looking to capitalize on the action.
Given the unpredictable nature of the market, relying solely on a list of top performers is not a reliable indicator of future success. However, it is worth noting that several energy stocks have consistently proven themselves to be leaders in their field over the years. In this article, we aim to present you with three energy stocks that you shouldn’t ignore.
Exxon Mobil (XOM)
Exxon Mobil (NYSE:XOM) is a huge company whose primary businesses include crude oil and natural gas exploration and production. Analysts estimate that this stock will trade within a one-year range of $95.77 to $123.75, with an average of $110.25.
Ever since the company started drilling on the Arkansas lithium well, Exxon Mobil has “aims to produce enough Mobil Lithium with the potential to supply approximately one million EVs annually.” Of course, this venture into the lithium market is not without the risk of being placed in direct competition with international rivals. Nonetheless, XOM’s established ties with the automotive sector and its well-known brand create opportunities for forging new business partnerships in the road ahead.
Looking at its financials, Exxon Mobile’s net income saw a 39.88% increase over the past five years. Although XOM’s price-to-earnings (P/E) valuation of 13.52x, sits slightly above its sector average of 9.50x, it could signal investor’s optimism in this energy giant’s forward-looking high-growth operations and catalysts.
Chevron (CVX)
Chevron (NYSE:CVX) operates in two divisions: upstream and downstream. The upstream sector engages in the exploration, production and transportation of crude oil and natural gas. The downstream division refines crude oil into petroleum products. Yahoo Finance analysts predict CVX’s one-year price range to sit between $139.62 to $172.54, with an average of $152.55.
Energy stocks like CVX have kicked off the year on a strong note, with the Energy Select Sector SPDR Fund (NYSEARCA:XLE) showing double-digit gains year-to-date (YTD), mirroring the performance of technology stocks. Given Chevron’s near 11.3% share in this sector, investors can rely on this company as an industry-defining leader with plenty of tailwinds.
When it comes to revenue, Chevron had a impressive 32.70% increase in the stock price over the past five years. Like many other energy giants, its 13.98x P/E valuation sits slightly higher than its sector average. Nonetheless, given the recent consolidation in the broader sector, now is one of the prime times for investors to scoop up some shares of global leaders like Chevron.
ConocoPhillips (COP)
ConocoPhillips (NYSE:COP) engages in the exploration, extraction, transportation and sale of crude oil, bitumen and other natural gas liquids across various regions globally. Yahoo Finance analysts estimate a one-year price range of $95.70 to $135.18, with an average of $110.55.
Similar to other companies in this sector, its share value has recently surged due to the recovering U.S. economy and overall OPEC supply limitations that have boosted petroleum prices. This favorable operating environment is expected to continue boosting COP’s petroleum prices into the new quarter.
Furthermore, as headwinds come into ConocoPhilips’s upcoming earnings release, analysts and investors are closely monitoring the potential for increased dividends and share buybacks. While COP’s valuation may sit higher than competitors like XOM or CVX, we see COP as a company focused currently on exploration and production, rather than strict price risk mitigation measures. As prospects of improved free cash flow are set to come in, COP sits as an attractive company with lots of earnings surprise potential into the upcoming quarter.
On the date of publication, Ian Hartana and Vayun Chugh 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.
