3 Energy Stocks to Buy Now: May 2024

  • Balance your portfolio between robust oil giants and emerging renewable energy opportunities.
  • ConocoPhillips (COP): ConocoPhillips excels with a robust upstream presence in the Permian Basin and Eagle Ford Shale, offering strong profit margins.
  • Enterprise Products Partners LP (EPD): Enterprise Products stands out with its stable midstream operations under long-term contracts and a significant $6.9 billion in growth projects through 2026.
  • NextEra Energy (NEE): NextEra Energy leverages its stable utilities business to expand its renewable portfolio, ensuring continued growth whole rewarding its investors in the process.
Energy Stocks to Buy - 3 Energy Stocks to Buy Now: May 2024

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Investing in the top energy stocks to buy in today’s market points to a complicated landscape. Oil prices have been incredibly volatile in the past year, peaking above $90 a barrel and dipping to the $60s, weighing down bottom lines of the top oil companies. However, despite the fluctuations in price, the top oil stocks continue to flex their muscles and offer stellar upside at current prices.

Meanwhile, the renewable energy sector is staging its own promising sideshow. Achieving net-zero emissions is a tall order, and energy systems across the globe have plenty of catching up to do. Hence, investors must favor a balanced portfolio, directing their investments in renewable and traditional energy sectors.

Energy Stocks to Buy: ConocoPhillips (COP)

Oil Stocks ConocoPhillips (COP)

ConocoPhillips (NYSE:COP) stands out as one of the U.S.’s leading exploration and production (E&P) companies thanks to its robust upstream capabilities. With its strategic bases in the Permian Basin and Eagle Ford Shale, COP commands an impressive portfolio, benefitting from relatively low production costs. Hence, it’s one of the most profitable businesses in its niche, with 5-year gross, net income, and free-cash-flow (FCF) margins at 46%, 14.3%, and 13.2%, respectively. Moreover, it boasts a stellar dividend profile, returning roughly 50% of its earnings to its stockholders. Additionally, it yields an excellent 2.6%, with 5-year growth at 22%.

Recent results have been marred by volatility in its natural gas operations, offset by higher oil production volumes. However, volatile energy prices are unlikely to impact the firm’s cash distribution to its stockholders. COP expects to return a whopping $9 billion in capital to shareholders this year through dividends and share repurchases.

Enterprise Products Partners LP (EPD)

A magnifying glass zooms in on the website of Enterprise Product Partners (EPD)
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Midstream giant Enterprise Products Partners (NYSE:EPD) is a high-quality yielder trading at a highly attractive price. It boasts an efficient business model with a vast pipeline and storage network globally. Moreover, it operates under long-term, take-or-pay contracts, ensuring healthy profits as customers pay for pipeline and storage capacity, regardless of usage. Consequently, it has built a massive cash war chest, with its trailing-twelve-month (TTM) cash flows exceeding $2.7 billion.

Recent results have been impressive, with EPD bouncing back with positive top-line growth in the past couple of quarters. Despite the market headwinds, it delivered two consecutive quarters of top-and-bottom-line beats. Moreover, as we advance, it lined up $6.9 billion worth of growth projects through 2026. Furthermore, it trades at just 1.11 times forward sales estimates, 26% behind the sector median. Add to that a forward dividend yield exceeding 7%, with 25 years of payout growth, and you have a stock that’s tough to pass up.

NextEra Energy (NEE)

Nextra Energy (NEE) website on a mobile phone screen
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NextEra Energy (NYSE:NEE) is one of the biggest forces in the U.S. utilities and renewable energy landscape. Over the past few years, NextEra has leveraged its dependable utilities business to fuel its ambitious green energy projects. This strategy is paying off, with its 5-year average top-line growth at 12% while generating 20% EBITDA in the same period. Moreover, it’s been an incredibly rewarding investment over the years, with its 5-year returns at 74%.

Despite operating in a volatile environment, NextEra has held up relatively well. Despite the dip in its Q1 sales, it posted a healthy 8% jump in its adjusted EPS. This superb growth is backed by a rapid increase in its renewable energy capabilities, adding 1,640 megawatts of solar energy that are now operational. This adds to its already extensive 6,400-megawatt solar portfolio. Also, the firm has added 2,765 megawatts to its renewable energy project backlog.

As we advance, its management expects stable single-digit growth in its top-line of 6% to 8% over the next couple of years.  Hence, NEE has decent upside potential, with a dividend growing for over 28 years.

On the date of publication, Muslim Farooque 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.

Muslim Farooque is a keen investor and an optimist at heart. A life-long gamer and tech enthusiast, he has a particular affinity for analyzing technology stocks. Muslim holds a bachelor’s of science degree in applied accounting from Oxford Brookes University.

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