The surge in AI and Big Tech continues capturing widespread attention, but savvy investors will want to focus on energy stocks. Energy stocks are off to an excellent start this year, with the Energy Select Sector SPDR Fund posting double-digit gains year-to-date (YTD), performing in line with tech stocks. Moreover, despite a somber outlook on the stock market, Morgan Stanley has shifted its stance on energy stocks to ‘overweight’ from ‘neutral.’ This adjustment is based on the stock prices of top energy companies that haven’t kept pace with the bullishness in the fossil fuel market. Hence, with robust prospects ahead and attractive valuations, it’s prudent to bet on the best energy stocks to buy.
Best Energy Stocks to Buy: Occidental Petroleum (OXY)
Oil and gas titan Occidental Petroleum (NYSE:OXY) has established its position as a bellwether in its niche, attracting some of the biggest names in investing. It has been one of the top Warren Buffet stocks, with his investment firm Berkshire Hathaway (NYSE:BRK-A, NYSE:BRK-B) holding a significant 27.8% stake. Buffet is known for betting on value stocks that offer dividends, and OXY fits the bill. Over the past three years, the company has raised its dividend payouts by a remarkable 180% CAGR.
It recently upped its payout by an impressive 22%, having paid dividends in the past 34 consecutive years. Moreover, OXY stock trades at just 1.91 times forward sales estimates, offering plenty of upside. Financially, Occidental continues to outperform expectations with its latest top-and-bottom-line results. Additionally, its active and growing oil production continues to underscore its operational strength. Given these robust financial and operational indicators, Occidental offers a compelling investment case.
NextEra Energy (NEE)
NextEra Energy (NYSE:NEE) is arguably the safest bet in the green energy space. Its robust utility operations have effectively set the foundation for its ambitious clean energy investments. Catering to more than 11 million people through its utility arm, NEE can potentially play a massive role in America’s green energy shift. It plans to inject upwards of $85 billion into green infrastructure by 2025, positioning itself as a forerunner in its niche.
It wrapped up another incredible year in 2023, posting a 34% jump in sales to $28.11 billion, along with a 76% increase in net income to $7.3 billion. To top it off, its board recently green-lit an updated dividend policy, which translates to a roughly 10% growth rate in dividends through 2026. To put things in perspective, the company has raised its dividend payout for 28 consecutive years. Therefore, with its operation prowess, excellence, and strategic vision, NEE stock remains a compelling investment opportunity in the clean energy landscape.
Cameco (CCJ)
The uranium market is hot, with prices reaching 16-year highs at over $100 a pound. Moreover, following the Nord Stream 2 pipeline incident, there’s more focus on nuclear energy than ever before. With this optimistic backdrop, Cameco (NYSE:CCJ) is a giant to consider in the uranium mining space with operations in Saskatchewan, the U.S., and a strategic partnership in Kazakhstan.
With over 30 years in the business and long-term supply contracts, Cameco is positioned excellently to capitalize on these trends. Additionally, its recent venture into acquiring a 49% stake in Westinghouse Electric, alongside Brookfield Asset Management, solidifies its foothold in the sector. This partnership alone could potentially yield a massive adjusted EBITDA between $445 million and $510 million, with a projected annual growth rate of 6% to 10%, highlighting Cameco’s key role in powering the future of nuclear energy.
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.