Oil prices remain in retreat. Currently the price of West Texas Intermediate (WTI) crude oil, the U.S. standard, is trading just above $70 a barrel, though it has dipped below that key level on several occasions. Concerns about slumping demand, a global recession, and excessive production are conspiring to drag crude prices lower, creating some energy stocks to sell ideas.
While Saudi Arabia recently announced plans to voluntarily cut its production level by one million barrels of crude oil a day beginning in July, that move has done little to lift oil prices. After reporting record profits in 2022, most oil companies are now suffering a nasty hangover as the party in the energy sector has come to an abrupt end. Here are three sorry energy stocks to sell in June before it’s too late.
British Petroleum (BP)
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British Petroleum’s (NYSE:BP) shares stumbled by 5% in May. This came after the oil giant revealed a 36% reduction in its share buybacks, going down to $1.75 billion from the former $2.75 billion. Investors frowned upon the cutback, leading to a meager 3% increase in BP stock in 2023. This news arrived alongside lukewarm quarterly results that failed to impress analysts.
Diving into details, BP posted a Q1 profit of $4.96 billion. This figure is a 20% dip compared to the $6.20 billion recorded in Q1 2022 when crude oil prices shot up following Russia’s invasion of Ukraine. The Q1 figures represented a noticeable slowdown from BP’s record-breaking year. The energy giant previously reported an annual profit of $27.7 billion, over twice its 2021 profit.
The dividend remains constant for now, but the company halted its upward trend. There was a 10% increase announced earlier in February. It seems the golden days are behind.
Suncor Energy (SU)
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Canada’s Suncor Energy (NYSE:SU) faces a number of challenges. In May, the company reported that its operating earnings for the first quarter fell 34% year-over-year to $1.81 billion. Suncor blamed the earnings decline on decreased crude oil prices. By the start of June, the company announced plans to cut 1,500 jobs in an effort to reduce costs. At the same time, Suncor Energy is under extreme pressure to turnaround its business from activist investor Elliott Management, which has taken a stake in the company. This makes it one of those energy stocks to sell.
Rich Kruger, the former chief executive of Imperial Oil (NYSEAMERICAN:IMO), took over as Suncor’s new permanent CEO only a few months ago and has been given a mandate to improve the company’s financials and stock price, both of which have trailed other energy concerns. However, the Q1 results did not inspire confidence. Suncor Energy said its upstream production during Q1 totaled 742,100 barrels of oil equivalent per day, down 3% compared with 766,100 a year earlier. SU stock has fallen 28% in the last 12 months.
Devon Energy (DVN)
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Devon Energy (NYSE:DVN) is in a downturn. This U.S. oil titan has watched its shares drop by 13% since the beginning of the year. This contributes to a 35% tumble over the past year. Despite the substantial 8.95% dividend yield from DVN, its stock hasn’t remained stable. This is due to falling oil prices. The downfall is even more distressing, considering the 75% rise in Devon Energy’s stock in 2022, when oil prices surged to over $120 a barrel.
Next, poor earnings have further deflated DVN’s stock. The stock plunged 12% in a single day in February. This fall was triggered by disappointing Q4 2022 earnings. In the following months, analysts cited high capital expenditures, diminishing production, and shrinking profits as reasons for selling the stock.
Lastly, there’s uncertainty around the dividend. After releasing the latest earnings report in May, Devon Energy slashed the variable portion of its dividend. This has led some analysts to speculate about more potential cuts.
On the date of publication, Joel Baglole 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.
Joel Baglole has been a business journalist for 20 years. 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.
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