Will GOP Retake White House? 3 Top Oil & Gas Picks to Buy for a Fossil Fuel Revival.


  • Here are three oil and gas stocks that look like smart investments if the GOP retakes the White House. 
  • Schlumberger (SLB): Schlumberger was just awarded three contracts for offshore oil drilling.  
  • Kinder Morgan (KMI): This midstream company makes sense particularly if pipelines reopen.  
  • Occidental Petroleum (OXY): This vertically integrated oil giant has been on a tear lately and shows no signs of slowing down.  
oil and gas stocks - Will GOP Retake White House? 3 Top Oil & Gas Picks to Buy for a Fossil Fuel Revival.

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This year’s presidential election is already eliciting strong feelings about the two presumptive nominees. However, if you have money in the market your goal isn’t to pick the winner, it’s to make money no matter who that winner may be. The election is still over six months away, but by any measure the result is a coin flip. That means you should be considering the policy changes that would affect oil and gas stocks in a GOP administration.  

For starters, this would undoubtedly be a fossil fuel-friendly administration. That would take the form of more permitting, reopening of pipelines, and a move towards an energy picture that looks a lot more like 2019 than 2024.  

But here’s something to consider no matter which party you back. Demand for oil is likely to increase no matter who resides at 1600 Pennsylvania Avenue. Money from the Inflation Reduction Act and the Chips Act continues to flow into the economy. And that means things are getting built, materials are moving around, and all of it requires oil.  

That’s why analysts are raising their price targets. For example, Bank of America (NYSE:BAC) raised its price target for crude oil to $95 a barrel. And if the conflict in the Middle East escalates, that can easily become a ridiculously low target.  

The spike in oil and gas stocks hasn’t happened as quickly as some analysts believed it would. Still, a higher price seems inevitable. Here are three oil and gas stocks that can help you take advantage of this potentially massive policy shift.  

Schlumberger (SLB) 

slb stock
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Schlumberger (NYSE:SLB) is an oil services company that is a logical choice for investors who expect that drilling activity will increase. The economics of the oil business shows that for every 10% increase in oil prices, there is a 4% increase in drilling activity. That makes sense because oil companies need oil to get above a certain price before they’re willing to start new drilling.  

Schlumberger is a leader in providing offshore drilling equipment that is less carbon-intensive than traditional onshore drilling. And, Petrobras (NYSE:PBR) recently awarded the company three contracts for the hardware and services that will be needed for up to 35 subsea wells as Petrobras develops its offshore Buzios Wave II oilfield.  

Plus, Schlumberger has been on an acquisition spree. On March 27, 2024, the company announced its agreement to acquire majority ownership in Aker Carbon Capture. And on April 2, it announced an all-stock deal to purchase the energy firm, ChampionX. 

Kinder Morgan (KMI) 

Kinder Morgan logo on a sign outside the company headquarters in Houston.
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To be fair, Kinder Morgan (NYSE:KMI) doesn’t necessarily need a change in energy policy to be an attractive buy, but it certainly wouldn’t hurt. The midstream company controls a wide network of pipelines and terminals that transport oil and natural gas. 

This infrastructure comes with long-term contracts that provide predictable revenue and earnings. But with a company like Kinder Morgan, it’s the underlying commodity price that allows it to generate profit and increase cash flow. That’s been a struggle for the company in recent years, but that appears to be changing. 

And institutional investors seem to agree and continue to buy KMI stock. Analysts are also generally bullish with a $20.41 consensus price target for KMI. That gives investors 15% upside in addition to a dividend that yields 6.37% and is due for an increase in coming quarters.  

Occidental Petroleum (OXY)

Person holding cellphone with logo of American company Occidental Petroleum Corp. (OXY) on screen in front of website. Focus on phone display. Unmodified photo.
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If you prefer to buy one of the integrated “big oil” companies, Occidental Petroleum (NYSE:OXY) is a fine choice. It’s been a favorite of Warren Buffett since 2020. In fact, Buffett’s hedge fund Berkshire Hathaway (NYSE:BRK.B) now owns around 25% of the oil giant.    

Buffett has consistently remarked that he is pleased with the company’s management, and its sustainability efforts. Occidental is positioned to be a leader in carbon capture which some analysts believe could be a $4 trillion industry by 2050. In fact, chief executive officer Vicki Hollub believes the company will eventually generate more profits from carbon management services than from traditional oil and gas.  

Occidental is also positioned to reward shareholders. That is noticeable in the company’s dividend which was slashed in 2020, but has been growing strongly recently. And with higher oil prices likely to be in play for some time, that dividend will be moving higher.  

But Buffett isn’t alone. The company has recently received six analyst upgrades, including by Scotiabank (NYSE:BNS) which has the highest price target of $90.

On the date of publication, Chris Markoch 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 Markoch is a freelance financial copywriter who has been covering the market for over five years. He has been writing for InvestorPlace since 2019.

Article printed from InvestorPlace Media, https://investorplace.com/2024/04/3-oil-and-gas-stocks-that-will-soar-on-a-gop-win/.

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