Most oil and gas companies saw their stocks skyrocket in recent months. And while some have cooled off, the uncertainty of the geopolitical climate and unstable macroeconomic environment points to another year of healthy upside for energy stocks. In addition, the Federal Reserve’s commitment to a hawkish policy could also mean that purchasing power starts improving soon, which could also benefit energy stocks. In fact, here are seven that investors may want to consider.
COP ConocoPhillips $124.65 CVX Chevron $187.79 VLO Valero Energy $149.96 WDS Woodside Energy $26.88 SMR NuScale Power $10.68 JKS JinkoSolar $56.55 EPSN Epsilon Energy $5.90
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ConocoPhillips (NYSE:COP) is a leading oil and gas giant coming off an incredibly successful year. Net income nearly doubled in its most recent quarter thanks to cost control and the booming fossil-fuel market. Year-over-year revenue and EBITDA growth have improved by triple-digit margins. Similarly, its free cash flow margins have grown over 118% over the past year. ConocoPhillips is looking better than ever financially, with an impressive $8 billion cash balance. That represents almost a 60% increase in its cash balance from the same period last year. Moreover, it has effectively returned $15 billion to its shareholders while investing in new projects and shoring up its war chest for a possible market dip.
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Chevron (NYSE:CVX) is a smart choice for those looking for an incredible long-term income investment. It has strategically positioned itself with low breakeven assets to deliver strong cash flows regardless of the economic cycle effectively. Its dividend-paying track record boasts 35 years of payout expansion. With Chevron as part of your portfolio, you’re sure to lower your risk and maximize your opportunities for long-term success.
Furthermore, the leading energy company boasts an impressive operating cash flow potential of more than $40 billion annually. Even more exciting, Chevron plans to spend $17 billion this year in capital expenditures, up $2 billion from last year. Such a large capital investment signifies that Chevron is ready to adapt to the lower-carbon business environment. Fortunately, this prosperous enterprise has enough financial flexibility to fund these investments without compromising dividend growth or share repurchases.
Valero Energy (VLO)
Valero Energy’s (NYSE:VLO) impressive refinery portfolio has solidified them as a leader in the global energy sector. Its refineries span from North America to the U.K., making it an international powerhouse in the sector. Moreover, its dedication to providing resources that meet high production and sustainability standards has allowed them to become one of the top players in the energy sector. The past few months have truly been remarkable for Valero.
Thanks to key market fundamentals and perfect timing, its refinery margins have dramatically increased, allowing it to expand its bottom line further. As the domestic economy has started its upswing, demand for fuel has skyrocketed, leaving older production infrastructure to be relied upon more heavily than ever before.
Woodside Energy (WDS)
Woodside Energy (NYSE:WDS) is a powerhouse in the Australian energy industry, representing the country’s mightiest independent dedicated oil and gas company. It has been a major force in the sector for years and has gained recognition at home and abroad. The company’s performance over the past year has been impressive, with sales and EBITDA growing by triple-digit margins. It reported its fourth quarter results recently, where sales growth shot up by 70% on record production levels.
With a long track record of strong financial performance, Woodside Energy stands out as a real opportunity to invest in tremendous growth prospects and healthy dividends. The company has consistently returned around 80% of its profits as dividend payments, and the remarkable strength of its balance sheet provides ample wiggle room for shareholder rewards expansion.
NuScale Power (SMR)
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NuScale Power (NYSE:SMR) is one of the most promising energy stocks on the market, offering unique advantages compared to traditional power sources. Its state-of-the-art small modular reactors utilize new and advanced safety protocols to maximize efficiency effectively. Not only are their facilities far safer than traditional alternatives, but they can also be deployed much closer to sources of demand which translates into significant cost savings for businesses.
NuScale Power has emerged as a leader in its niche thanks to its revolutionary nuclear technology that offers immense value. One uranium fuel pellet can produce as much energy as 17,000 cubic feet of natural gas. As reality dawns on policymakers everywhere, an increasing focus is being placed on enabling technologies like NuScale Power that can power humanity toward an equitable future.
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JinkoSolar (NYSE:JKS) is a highly attractive investment opportunity in the renewable energy space. Its uniquely poised to make significant strides, both financially and environmentally, as multiple countries across the globe shift to clean energy sources. Moreover, it is the largest solar panel maker in the world and boasts a market share of 12.8% in the solar P.V. cell market. Its expansive asset base and burgeoning cash position demonstrate strength and resilience in an unpredictable market. Moreover, with its shares trading at under 0.5 times forward sales, and a positive near-term outlook, now is the perfect time to invest in JKS stock. It operates in a market that is set to grow at a 13.6% CAGR until 2027 offering tremendous upside potential ahead.
Epsilon Energy (EPSN)
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Epsilon Energy (NASDAQ:EPSN), headquartered in Houston, Texas, is flying under the radar as a leading energy stock related to independent oil and natural gas extraction. The firm specializes in on-shore projects.EPSN is an exceptional company, evidenced by its impressive balance sheet, outsized revenue growth, and robust profit margins. With a 40.5% return on equity, ESPN’s operational performance is well ahead of its peers. Despite its stellar performance, the stock trades at less than four times cash flows, more than 40% lower than the sector median. Additionally, it offers an amazing dividend yield of over 4%. Clearly, EPSN provides the savvy investor with an exciting opportunity for lucrative returns.
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
Muslim Farooque is a keen investor and an optimist at heart. A life-long gamer and tech enthusiast, he has a particular affinity for analyzing technology stocks. Muslim holds a bachelor’s of science degree in applied accounting from Oxford Brookes University.
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