Energy stocks soared in 2022 as prices rose with a rapid rise in demand after COVID lockdowns were lifted and supply shocks due to the Ukrainian war. However, they have since declined, suffering a big blow in 2023 when energy prices remained flat.
Heightened oil prices at the start of 2024 boosted energy stocks. However, heating oil prices and natural gas prices have been on the decline. Current prices for all energy products remain below their 2022 peak.
This shows you that energy stocks are super volatile and can doom your portfolio fast if not managed correctly.
In this environment of low energy product prices, some energy stocks have fared worse than others. These three energy stocks have a bleak future and could sink your investment portfolio, which is why selling them off soon will be your best bet if you want to protect your wealth.
Let’s look into why you should consider selling them off by 2025.
Halliburton (HAL)
Halliburton (NYSE:HAL) is the second-biggest oil services company and a major player in the fracking industry. The company’s stock suffered a major blow on Friday, July 19, after the release of its second-quarter results.
In the results, Halliburton reported a 1% increase in revenue to $5.83 billion. However, it reported an 8% decline in North American revenue. With the U.S. being a leader in shale oil production, the decline in North American revenue caused jitters among investors.
HAL stock closed 5.6% lower at $34.40 per share, continuing a losing streak that has been going on since the start of the year. Year to date, HAL stock is down 4.76%, while over the past 12 months, it has lost 6.88% of its value.
HAL stock has underperformed compared to the S&P 500 Energy Index, which could signify looming pain heading into 2025. In the same 12 months that HAL declined by 6.88%, the primary energy stocks index rose by around 9%.
With the rise in energy stocks at the start of 2024, HAL has significantly lagged, pointing to trouble ahead for the stock. Based on its underperformance and the falling revenue in North America, you should consider dropping this stock by 2025.
Tenaris (TS)
Tenaris (NYSE:TS) manufactures and sells steel pipes for the gas and oil industry in the Americas, Europe, Asia Pacific, the Middle East and Africa.
TS stock is amongst the worst-performing energy stocks of 2024, down 8.4% year to date. In the first quarter of fiscal 2024 results, Tenaris reported a 17% year-over-year decline in revenue to $3.4 billion. It also reported a 34% decline in earnings to $1.27, which is always a signal for investors to abandon a stock.
Tenaris also recently suffered a substantial legal blow in Brazil, which undoubtedly impacted its top line.
Looking at the earnings per share performance, analysts expect it to drop in the upcoming quarter. The stock also has a low price-to-earnings ratio of just 5x earnings. However, while this would ordinarily signal it is undervalued, analysts forecast earnings will fall in coming quarters.
Based on the analysts’ forecast, it is likely that its price-to-earnings ratio could drop further, which signals bleak times for TS stockholders. For anyone looking to trim their portfolio, TS stock should be one of the energy stocks they divest from by 2025.
Occidental Petroleum (OXY)
Occidental Petroleum (NYSE:OXY) is a major oil exploration company with operations in the U.S. and the Middle East. The company also manufactures petrochemical products in Chile, the U.S. and Canada.
In a switch, last October Occidental purchased an experimental carbon capture and storage (CCS) company called Stratos. It previously spent years running a separate CCS operation that never went anywhere as the technology is unproven.
Looking at its performance, the OXY has underperformed compared to the energy sector, only gaining 3.93% in the past 12 months.
In its first quarter fiscal 2024 results, Occidental Petroleum reported a 17.3% year-over-year decline in quarterly revenue to $5.98 billion, while net income fell 29.69% year over year to $888 million. Additionally, the adjusted earnings per share fell 42.2% year over year to 63 cents.
The company’s poor financial results and investment in unproven technology do not bode well for its future performance. While the stake Berkshire Hathaway (NYSE:BRK.B) has in the company has played a role in its high valuation, that could fall if investors do not start to see results soon.
Consequently, OXY stock should be among the energy stocks you divest from heading into 2025 to insulate your portfolio from its high risk.
On the date of publication, Joel Lim 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.
On the date of publication, the responsible editor did not have (either directly or indirectly) any positions in the securities mentioned in this article.
