The energy sector is comprised of companies focused on the exploration, production, and marketing of oil, gas, and renewable resources around the world. Popular energy sector stocks include upstream companies that are primarily engaged in the exploration of oil or gas reserves. Well-known companies are Devon Energy Corp. (DVN) and Chesapeake Energy Corp. (CHK). Downstream companies include HollyFrontier Corp. (HFC), which refines and processes oil and gas products for delivery to consumers.
The early 2020 oil price war and the COVID-19 pandemic drove oil prices to record lows in April 2020 and sharply pushed down energy stocks, as represented by the Energy Select Sector SPDR ETF (XLE). XLE has risen from its bottom last year, and is now only slightly underperforming the broader market. It has provided a total return of 42.0% over the past 12 months, just below the Russell 1000’s total return of 45.6%. These market performance numbers and all statistics in the tables below are as of May 21, 2021.
Here are the top 3 energy stocks with the best value, the fastest growth, and the most momentum.
These are the energy stocks with the lowest 12-month trailing price-to-earnings (P/E) ratio. Because profits can be returned to shareholders in the form of dividends and buybacks, a low P/E ratio shows you’re paying less for each dollar of profit generated.
- Equitrans Midstream Corp.: Equitrans Midstream owns and operates midstream assets in the Appalachian Basin. The company manages natural gas transmission, storage, and gathering systems and lines. For Q1 2021, the company’s net income plunged year-over-year (YOY) on falling operating revenue.
- Antero Midstream Corp.: Antero Midstream owns, develops, and operates midstream energy assets. The company provides gathering pipeline safety, and related services across North America.
- Valvoline Inc.: Valvoline is a manufacturer and distributor of automotive lubricants and chemicals. The company produces motor oil, antifreeze, brake fluid, grease products, and more. On May 18, the company announced that it had realigned its global operations, including updating its business segments. Valvoline will now operate under two segments: Retail Services, which renames the former Quick Lubes segment; and Global Products, which includes both the former Core North America and International segments.
These are the top energy stocks as ranked by a growth model that scores companies based on a 50/50 weighting of their most recent quarterly YOY percentage revenue growth and their most recent quarterly YOY earnings-per-share (EPS) growth. Both sales and earnings are critical factors in the success of a company. Therefore ranking companies by only one growth metric makes a ranking susceptible to the accounting anomalies of that quarter (such as changes in tax law or restructuring costs) that may make one or the other figure unrepresentative of the business in general. Companies with quarterly EPS or revenue growth of over 2,500% were excluded as outliers.
- Cabot Oil & Gas Corp.: Cabot Oil & Gas is an oil and gas company that develops and explores properties in North America. The company maintains interests in Texas, Louisiana, the Rocky Mountains, and the Appalachian and Anadarko Basins, as well as in Canada. On May 24, Cabot Oil & Gas and Cimarex Energy Co. announced an all-stock merger of equals. The enterprise value of the combined companies is approximately $17 billion, and the transaction is expected to close in Q4 2021.
- Valvoline Inc.: See above for company description.
- Cheniere Energy Inc.: Cheniere Energy owns and operates liquefied natural gas pipeliens and receive terminals in Louisiana and Texas.
These are the energy stocks that had the highest total return over the last 12 months.
- Antero Midstream Corp.: See above for company description.
- Cimarex Energy Co.: Cimarex is a crude oil and natural gas exploration and development company. It’s engaged in drilling, completing and operating wells in states including Oklahoma, Texas and New Mexico. As indicated above, Cimarex will combine with Cabot Oil & Gas in an all-stock merger.
- Targa Resources Corp.: Targa Resources provides natural gas and natural gas liquids services. The company gathers, compresses, treats, process, and sells natural gas. It also stores, fractionates, treats, transports, and sells natural gas liquids and related products. The company reported net income attributable to Targa common shareholders of $125.6 million for Q1 2021, versus a giant net loss one year prior. YOY revenue rose 77.3%.
The comments, opinions and analyses expressed herein are for informational purposes only and should not be considered individual investment advice or recommendations to invest in any security or to adopt any investment strategy. While we believe the information provided herein is reliable, we do not warrant its accuracy or completeness. The views and strategies described on our content may not be suitable for all investors. Because market and economic conditions are subject to rapid change, all comments, opinions, and analyses contained within our content are rendered as of the date of the posting and may change without notice. The material is not intended as a complete analysis of every material fact regarding any country, region, market, industry, investment, or strategy.