9 Best-Performing Oil Stocks of September 2023

best oil stock

With an average price target of $130.42, Wall Street gives COP implied price upside of about 22% in the next 12 months or so. Add in the dividend yield, and the implied total return comes to about 25%. Oil stocks followed up an incredible 2022 with dismal returns through the first three months of the new year. But a surprise production cut on the part of OPEC and its allies might be just the catalyst the best oil stocks need to return to their market-beating ways. Enbridge’s pipeline operations generate stable cash flow backed by long-term contracts and government-regulated rates.

Is Devon Energy Stock a Buy? – The Motley Fool

Is Devon Energy Stock a Buy?.

Posted: Tue, 12 Sep 2023 14:15:00 GMT [source]

If you don’t mind a bit of variability in dividends, this high-yield energy stock could be worth a look. There are companies that find and pump oil, companies that provide oilfield services, companies that refine oil and integrated companies that do it all. In addition, there are some specialized companies that own and operate oil pipelines. When you see prices rising or falling at the gas pump, you might wonder how those market shifts are playing out with oil stocks on Wall Street.

When crude oil dips, you want to be invested in its alternatives so that your portfolio is healthy and you will profit when selling off your crude oil positions, should you choose to do so. When oil sells for less than, many of these companies will lose money. However, even during periods of strong growth, the price of oil is affected by seasonal events. As any driver will tell you, the price of gasoline goes up in the summer months because the amount of driving increases. In this article, we’ll review why you should consider investing in oil; we’ll review your investment options, and more directly the different types of oil companies that you can invest in.

Should I invest in oil and gas companies now?

True, EVs have now become ingrained in the mainstream consciousness. Nevertheless, the best lithium-ion EV battery in the market today still cannot compete with gasoline’s energy density. This has presented an opportunity for contrarian investors as it’s possible that oil stocks — many of which have been strong premarket movers this year — have a longer-than-expected lease on life. Over time, investors gradually increased their position in oil stocks as they anticipated an eventual return to normal. Now, fueled by the COVID-19 vaccine rollout, the fossil-fuel energy sector has become one of the best-performing market segments.

  • This has presented an opportunity for contrarian investors as it’s possible that oil stocks — many of which have been strong premarket movers this year — have a longer-than-expected lease on life.
  • This can mean that their risks are spread out more broadly than companies that specialize in one aspect of the oil industry.
  • In addition to issues caused by international events, especially those that impede the safe transport of natural resources.
  • Oil stocks contain less risk than trying to buy and sell oil on the options or futures markets.
  • However, as growth concerns increased on the back of tightening monetary policies, oil declined meaningfully to 2023 lows of $63 per barrel.

Kinder Morgan stock opened the day at $17.17 after a previous close of $17.13. Kinder Morgan is listed on the NYSE, has a trailing 12-month revenue of around USD$17.1 billion and employs 10,525 staff. Shell stock opened the day at $39.18 after a previous close of $39.15. Shell is listed on the NYSE, has a trailing 12-month revenue of around USD$220.2 billion and employs 87,000 staff. TotalEnergies stock opened the day at $49.31 after a previous close of $48.99.

Vanguard Energy ETF

ConocoPhillips routinely boasts one of the highest credit ratings among E&P companies, backed by a low leverage ratio for the sector and lots of cash. ConocoPhillips is one of the largest E&P-focused companies in the world. It specializes in finding and producing oil and natural gas and has operations in more than a dozen countries.

Given the inherent volatility of the energy sector, most investors would be better off not attempting to time the ups and downs of energy prices. A far better option is to recognize that having some ongoing energy exposure is desirable and then select a company that has a strong business and proven history of managing through the industry’s ups and downs. That will lead directly to integrated energy companies like Exxon, Chevron, and TotalEnergies. Headquartered in Irving, Texas, Pioneer Natural Resources is an independent oil and gas exploration and production company focusing on the Permian Basin in Texas.

Inferior resource quality, too much debt, ill-timed acquisitions, aggressive spending, and poor capital allocation strategies can all cause an oil company’s stock price to underperform oil prices and its peers. The industry also faces geopolitical headwinds from OPEC, the cartel of large oil-producing nations that can significantly influence oil prices by find the whole quantity if changing production quotas. Add in climate change concerns, and you can see that investments in the oil industry aren’t for the faint of heart. Any of these issues can wreak havoc on the oil market, sending stock prices plunging or soaring. Oil prices are notoriously volatile, often quickly changing on any whiff of imbalance between supply and demand.

He’s also written for Esquire magazine’s Dubious Achievements Awards. Unlike many of its peers, however, FANG has managed to generate positive returns in 2023, gaining 5.7% for the year-to-date. Of the 31 analysts covering the stock tracked by S&P Global Market Intelligence, 16 rate it at Strong Buy, eight say Buy and seven have it a Hold. That works out to a consensus recommendation of Buy, with high conviction.

Motley Fool Returns

He spent five years as a staff reporter at The Wall Street Journal, and has also written for The Washington Post and Toronto Star newspapers, as well as financial websites such as The Motley Fool and Investopedia. In July, Suncor Energy fired then-CEO Mark Little, who was replaced on an interim basis by the Executive Vice President for Downstream Operations Kris Smith. Mark Little’s departure came after Elliott Management raised concerns about safety and operational problems at Suncor, noting that there have been 12 fatalities at the company’s oil sites since 2014. Buffett no doubt likes that OXY stock nearly doubled in 2022, making it one of the best-performing stocks in the S&P 500. He also certainly likes Occidental Petroleum’s low P/E ratio of 5.3.

But there’s a bit more to the story because those dividend cuts came as BP and Shell announced that they would be investing more heavily in clean energy. TotalEnergies made the same investment shift, but it was very clear that the dividend was important to the company because it knew how important the dividend was to investors. These businesses span the entire energy sector, from drilling for energy (upstream), through the midstream (pipelines), and all the way to refining and chemicals (downstream). Although commodity prices play a material role in profits, the inherent diversification across the energy sector provides some balance to help soften the ups and downs. Therefore, the best online brokers for oil stocks mostly come down to personal preference. Since key incentives like commission-free trading have essentially become standardized, you can take your time picking the platform that works for you.

  • Its pipeline network consists of the Canadian Mainline system, regional oil sands pipelines, and natural gas pipelines.
  • For Q2 2023, the company’s capital expenditure was $632 million.
  • Now, with fears of recession declining and with production cuts by OPEC and its allies, oil is in recovery mode.
  • It has operations across the U.S., from the Marcellus Shale region that spans the northeast U.S. around Pennsylvania to the Permian Basin of New Mexico and west Texas and the Anadarko Basin around Oklahoma.
  • While some of that return comes from its dividend payment, most will be through repurchases.
  • Although it’s possible for investors to brave commodities markets and invest in oil directly, buying equities in oil companies can be more approachable for everyday investors, and potentially less risky.

One drawback of the ETF is its relatively higher expense ratio of 0.85%. However, the cost can be worth it because it lets investors own a basket of income-producing energy companies with a single investment. The Alerian MLP ETF is a fund that allows investors to target energy infrastructure midstream master limited partnerships (MLPs).

Its articles, interactive tools and other content are provided to you for free, as self-help tools and for informational purposes only. NerdWallet does not and cannot guarantee the accuracy or applicability of any information in regard to your individual circumstances. Examples are hypothetical, and we encourage you to seek personalized advice from qualified professionals regarding specific investment issues. Our estimates are based on past market performance, and past performance is not a guarantee of future performance. Faisal Humayun is a senior research analyst with 12 years of industry experience in the field of credit research, equity research and financial modeling. Faisal has authored over 1,500 stock specific articles with focus on the technology, energy and commodities sector.

S&P 500

The cyclical nature of the oil market is a big driver of volatility, with demand ebbing and flowing with the global economy. Before investing in any oil stocks, you need to find the right brokerage account for your investments. Most major online discount brokers have access to the oil company shares you’re looking for, but beware of fees and commissions. Almost all brokers are commission-free for stocks and ETFs now, and most require no minimums to open an account. Paying a flat fee on every trade is a thing of the past — if your current broker isn’t commission-free, consider finding a new one.

However, as Americans gradually adapt to the new normal, that volume has picked up. This year, contrarian investors have jumped on ENLC in anticipation of a broader recovery. Get this delivered to your inbox, and more info about our products and services. There are many options available to investors, but there’s no need to burn the midnight oil looking for the most compelling choices. Enter your email address below to receive the latest headlines and analysts’ recommendations for your stocks with our free daily email newsletter.

Devon Energy (DVN -1.44%) is also in an excellent position to capitalize on higher oil prices. They’d enable the producer to generate more cash from its existing wells. Meanwhile, Devon continues to drill more wells to grow its oil output.

Best Online Brokers for Oil Stocks

And Canada, that collectively adds up to 3.2 million barrels per day. The company also owns 12 ethanol plants that crank out 1.6 billion gallons of the biofuel on top of that. If you don’t already work with a stockbroker and you want to buy oil stocks, you’ll need to go through the following steps. These are the oil stocks in the S&P 500 Index with the best one-year performance.

These companies make money by providing midstream services such as operating pipelines or liquefied natural gas (LNG) export facilities. Meanwhile, Devon uses some of the cash it retains to repurchase shares. The company has already repurchased $2.1 billion in shares over the past two years, reducing its outstanding shares by 6%. It has about $900 million remaining on its current authorization, enough to retire another 3% of its outstanding shares. That combination of rising cash flows, higher dividend payments, and meaningful repurchases could drive up the share price, which currently sits more than 30% below its 52-week high.

best oil stock

A low P/E ratio shows that you’re paying less for each dollar of profit generated. Profit can be returned to shareholders in the form of dividends and share buybacks. EOG Resources (EOG) is another oil and gas exploration and production company that analysts say is primed to pump gushers of free cash flow back to its shareholders. Meanwhile, oil companies that operate independently of OPEC can also have an impact on oil prices. If they allocate too much capital to new projects, they can cause an oversupply and weigh on prices.

Marathon has taken advantage of its lower share price by gobbling up its stock. It spent over $700 million on share repurchases https://1investing.in/ during the first half of the year. The company has now spent $4.2 billion on share repurchases over the last seven quarters.

The global economy uses oil in many different ways including the gasoline that powers our cars, diesel fuel that’s essential in the trucking industry, jet fuel required for air travel. Oil is also necessary to heat and cool our homes as well as to power factories. DVN stock is up 28% in the past 12 months but currently sits 25% below its 52-week high of $79.40.

Questions Of Conduct: BP CEO Bernard Looney Resigns. Oil Stocks … – Investor’s Business Daily

Questions Of Conduct: BP CEO Bernard Looney Resigns. Oil Stocks ….

Posted: Wed, 13 Sep 2023 20:01:00 GMT [source]

When a barrel of oil sells for more than the sum of all these costs, oil companies turn a profit. For example, when the Covid-19 pandemic caused millions of offices and businesses to close, it had a devastating effect on the oil and gas sector. In fact, at one point, the futures contract for a barrel of oil turned negative. Oil is a commodity and like all commodities, its price is fundamentally driven by supply and demand. Transocean Ltd. , together with its subsidiaries, provides offshore contract drilling services for oil and gas wells worldwide.

They’ll collect a steady base dividend that’s sustainable throughout the oil price cycle and have the potential to earn significant payments during periods of high prices. Coterra is an independent oil and gas company focused on hydraulic fracturing of shale to extract fossil fuels, a process known as fracking. It has operations across the U.S., from the Marcellus Shale region that spans the northeast U.S. around Pennsylvania to the Permian Basin of New Mexico and west Texas and the Anadarko Basin around Oklahoma. Shares are up an impressive 40% or so in the last 24 months, compared with a mostly flat S&P 500 in the same period. But more importantly for long-term income investors, distributions have marched steadily higher as well.

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