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The energy sector consists of stocks related to the production and supply of energy around the world. The sector includes upstream firms that are involved in the exploration and production of oil or gas reserves, such as EOG Resources Inc. (EOG). Also in the sector are downstream companies that refine and process oil and gas products for delivery to consumers, including HollyFrontier Corp. (HFC). As represented by the Energy Select Sector SPDR ETF (XLE), the energy sector has gained 3.3% in the trailing 12-month period. This is far behind the S&P 500, which has climbed by 31.6%. All figures are as of January 3, 2020.
In spite of slow growth across the energy sector as a whole, some individual companies have thrived. Below we’ll look at the top 3 energy stocks with the best value, the fastest earnings growth, and the most momentum.
Best Value Energy Stocks
These are the energy sector 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.
- Devon Energy Corp.: Devon Energy is an upstream company focused on the exploration and development of oil and gas resources. Devon Energy focuses its efforts primarily in the central United States. In December 2019. Devon Energy announced the sale of its assets in the Barnett Shale, a major oil-producing region in Texas, for $770 million, as it simultaneously launched a $1 billion share repurchase program.
- ConocoPhillips: One of the largest energy companies in the country, ConocoPhillips is involved in the exploration, production, transportation, and marketing of crude oil, natural gas, and related products. In a recent earnings call, ConocoPhillips revealed that, in spite of a major stock buyback program, the company is heavy in cash and short-term investments. As of the end of the most recent quarter, ConocoPhillips had about $8.4 billion in these areas, which may help it to pivot toward a greater focus on renewable energy.
- Cabot Oil & Gas Corp.: Cabot Oil & Gas develops and explores properties throughout North America, including locations in Texas, the Rocky Mountains and Western U.S., among others. In its most recent quarterly results report in October, Cabot saw free cash flow increase by more than 150% year-over-year as the company also increased its quarterly dividend by 11% to $0.10 per share.
Fastest Growing Energy Stocks
These are the energy sector stocks with the highest year-over-year (YOY) earnings per share (EPS) growth for the most recent quarter. Rising earnings show that a company’s business is growing and is generating more money that it can reinvest or return to shareholders.
- Helmerich & Payne Inc.: Horizontal and directional drilling outfit Helmerich & Payne provides contract services at oil and gas wells in South America and the Gulf of Mexico. The company’s most recent quarterly report, issued in November for Q4 FY19, showed that in spite of completing an acquisition along with debt and share repurchasing programs, Helmerich & Payne increased its cash and short-term investment position by about $20 million quarter-over-quarter.
- Baker Hughes Co.: Baker Hughes is one of the largest oil field services companies in the world. This firm provides other energy companies with products related to exploration, drilling, and production. Formerly traded under BHGE, Baker Hughes changed its name to Baker Hughes Co. in October and began trading on the New York Stock Exchange under the symbol BKR.
- ConocoPhillips: See above for company description.
Energy Stocks With the Most Momentum
These are the energy sector stocks that had the highest total return over the last 12 months.
|Energy Stocks with the Most Momentum|
|Price ($)||Market Cap ($B)||12-Month Trailing Total Return (%)|
|Hess Corp. (HES)||69.84||21.3||64.8|
|ONEOK Inc. (OKE)||76.58||31.6||40.3|
|Kinder Morgan Inc. (KMI)||21.20||48.0||33.6|
|S&P 500 (SPY)||—||—||31.6|
|Energy Select Sector SPDR ETF (XLE)||—||—||3.3|
- Hess Corp.: Hess is a global energy company involved in everything from exploration and development to the transport and sale of natural gas and crude oil products. Just before the start of the new year, Hess announced success in its new project in Liza Field, offshore Guyana, which is expected to achieve a capacity of 120,000 gross barrels of crude oil per day in the months to come.
- ONEOK Inc.: Diversified energy company ONEOK is focused on the natural gas business and has operations across the United States. In its most recently quarterly report, ONEOK reported more than $673 million in cash and cash equivalents, up dramatically from about $12 million as of December 31, 2018.
- Kinder Morgan Inc.: Kinder Morgan focuses on midstream oil services, meaning it owns and control pipelines used to transport various gas and oil products. Kinder Morgan’s operations are active across more than 150 terminals connected by some 85,000 miles of pipeline. This network recently grew as Kinder Morgan finalized a deal to purchase Southcross Energy’s pipeline system.
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