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With Christmas just a few days away, I want to share with you the best stocks for your portfolio stocking stuffers: energy stocks.
You may be wondering, why not tech stocks? After all many are now trading at ultra-low prices, including big tech names like Amazon.com (AMZN), Meta Platforms, Inc. (META) and Google Inc. (GOOG), which recently fell to new 52-week lows.
But here’s the reality: Technology and energy stocks’ weighting in the S&P 500 is shifting.
Just a year ago, energy accounted for less than 2% of the S&P 500, while technology accounted for about 48%. I predict that energy stocks will account for 30% of the S&P 500 in early 2025, as technology stocks fall to about 32%.
So, as the weightings steadily change in the S&P 500, the tracking manager crowd (i.e., closet indexers) will be systematically forced to buy more energy stocks as leading technology stocks falter. In other words, tracking managers will be a net buyer of energy stocks (given their strong earnings momentum) and a net seller of technology stocks.
I should also add that, according to FactSet, the energy sector posted the best earnings growth in 2022, with earnings surging 151.7% in 2022.
The fact of the matter is oil and natural gas companies will boast the strongest earnings and sales growth for the next several quarters – and positive results should dropkick and drive these stocks higher.
So, if you want to give yourself a present this holiday season, you might want to consider the following four companies…
Stocking Stuffer #1: ConocoPhillips (COP)
ConocoPhillips (COP) is one of the largest independent exploration and production companies in the world. With an extensive energy portfolio that spans 14 countries, ConocoPhillips transports oil and natural gas around the world through its pipelines, as well as on tankers, trucks and rails. So, the company has profited from increased energy demand and rising prices.
During the third quarter, production rose to 1,754 million barrels of oil equivalent per day (Mboed). In turn, ConocoPhillips achieved adjusted earnings of $4.6 billion, or $3.60 per share, or 91.7% year-over-year earnings growth. The consensus estimate called for adjusted earnings of $3.44 per share.
For the fourth quarter, earnings are forecast to grow 41.9% year-over-year to $3.22 per share. Revenue is anticipated to rise 16.5% year-over-year to $18.59 billion.
Stocking Stuffer #2: Marathon Petroleum Corporation (MPC)
Marathon Petroleum (MPC) operates the biggest refining system in the U.S., with 13 refineries capable of refining about 2.9 million barrels per day.
In addition to its refining business, Marathon Petroleum also operates a network of pipelines, terminals and barges. Its midstream business is primarily the operations of its master limited partnership MPLX, which distributes, markets, stores and transports crude oil and refined products, as well as processes and transports natural gas and natural gas liquids. It also produces asphalt, feedstocks and petrochemicals.
In the third quarter, Marathon Petroleum reported that revenue rose 41.7% year-over-year to $45.79 billion, topping estimates for $31.92 billion. Third-quarter earnings jumped 731.2% year-over-year to $4.48 billion, or $9.06 per share, up from $694 million, or $1.09 per share. Adjusted earnings per share were $7.81, which beat estimates for $7.07 per share by 10.5%.
Analysts’ fourth-quarter earnings estimates have nearly doubled in the past three months. Estimates now call for fourth-quarter adjusted earnings of $5.82 per share. Revenue is expected to rise 6.1% year-over-year to $37.78 billion.
Stocking Stuffer #3: Marathon Oil (MRO)
Marathon Oil Corporation (MRO) operated in several of the top oil and natural gas-producing regions in the U.S., with operations in Eagle Ford, Bakken Shale, the Permian Basin and STACK/SCOOP. The company anticipates that it will produce between 285 million and 290 million barrels of oil equivalent per day (Mboed) this year.
Given third-quarter operational results, Marathon Oil is well on its way to achieving this goal: Third-quarter production totaled 295,000 Mboed. Oil production accounted for 166,000 million barrels.
Marathon Oil also reported third-quarter adjusted earning of $832 million, or $1.24 per share, and revenue of $2.25 billion, which represented 168.4% year-over-year earnings growth and 54.6% year-over-year revenue growth. The consensus estimate called for adjusted earnings of $1.19 per share on $2.02 billion in revenue.
Stocking Stuffer #4: Occidental Petroleum Corp. (OXY)
Occidental Petroleum Corp. (OXY) has provided energy exploration and petrochemical manufacturing services for more than 100 years. The company has energy and chemical assets around the world, including in the U.S., Africa, Latin America and the Middle East. Here in the U.S., Occidental Petroleum has operations in the Permian Basin, Rocky Mountains and the Gulf of Mexico.
In the third quarter, Occidental Petroleum produced 1,180 million barrels of oil equivalent per day (Mboed). Total U.S. production was 944 Mboed in the third quarter. During the first nine months of the year, the company achieved total production of 1,136 Mboed, with 902 Mboed in the U.S.
Given the strong operational results, Occidental Petroleum posted robust third-quarter results. Adjusted earnings surged 180.4% year-over-year to $2.44 per share, up from $0.87 per share in the same quarter a year ago. Third-quarter revenue came in at $9.5 billion. The consensus estimate called for earnings of $2.46 per share on $9.5 billion in revenue.
For more information on these four companies as well as the other stocks I like right now, sign up for Growth Investor now. Once you do, you’ll have access to my High-Growth Investments Buy List and Elite Dividend Payers Buy List – including today’s newest recommendations.
Click here to become a member of Growth Investor today. I hope you have a wonderful holiday and enjoy the long weekend!
The Editor hereby discloses that as of the date of this email, the Editor, directly or indirectly, owns the following securities that are the subject of the commentary, analysis, opinions, advice, or recommendations in, or which are otherwise mentioned in, the essay set forth below:
Amazon.com (AMZN), Meta Platforms, Inc. (META) Google Inc. (GOOG), ConocoPhillips (COP), Occidental Petroleum Corp. (OXY), Marathon Oil (MRO), Marathon Petroleum Corporation (MPC)