Top energy stocks for June include Shawcor Ltd., YPF SA, and TORM PLC, which have climbed by as much as 147% in the past year at the same time that the broader energy sector has underperformed the market.
The energy sector, as represented by the benchmark Energy Select Sector SPDR ETF (XLE), has fallen about 12% in the last 12 months, while the Russell 1000 Index is up close to 3%.
We look below at top energy stocks in three categories: best value, fastest growth, and most momentum. Benchmark figures above are as of June 1, 2023, while all data below is as of May 30.
Best Value Energy Stocks
These are the energy stocks with the lowest 12-month trailing price-to-earnings (P/E) ratio. 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.
| Best Value Energy Stocks | |||
|---|---|---|---|
| Price ($) | Market Capitalization ($B) | 12-Month Trailing P/E Ratio | |
| Saturn Oil & Gas Inc. (SOIL.V) | CA$2.22 | CA$0.3 | 0.4 |
| Obsidian Energy Ltd. (OBE) | 5.75 | 0.5 | 0.8 |
| Southwestern Energy Co. (SWN) | 4.87 | 5.4 | 0.8 |
Source: YCharts
- Saturn Oil & Gas Inc.: This is a Canadian energy company that explores and produces oil properties primarily in Saskatchewan, Canada. The company’s stock has been highly volatile amid turbulent oil prices and is down 30% in the past 12 months.
- Obsidian Energy Ltd.: Obsidian, formerly known as Penn West Petroleum Ltd., is a Canadian energy company exploring, producing, and developing oil and natural gas assets in the Western Canada Sedimentary Basin. The company recently appointed Stephen Loukas as permanent CEO after he had been in the role for more than three years on an interim basis. It also said it would buy back up to 8.1 million shares in 2023. Obsidian’s shares have plunged about 40% in the last year.
- Southwestern Energy Co.: An oil and natural gas explorer and producer with properties in Pennsylvania, Ohio, West Virginia, and Louisiana. In June of last year, Southwestern authorized a $1 billion share repurchase program to continue through the end of 2023. In the most recent quarter, the company posted net income of $1.9 billion, swinging from a net loss of $2.68 billion a year ago despite a 28% year-over-year decline in revenue. Its stock has fallen by almost half in the last 12 months.
Fastest-Growing Energy Stocks
These are the top energy stocks as ranked by a growth model that scores companies based on a 50/50 weighting of their most recent quarterly year-over-year (YOY) percentage revenue growth and most recent quarterly YOY earnings-per-share (EPS) growth.
Both sales and earnings are critical factors in the success of a company. Therefore, ranking companies by only one growth metric makes a ranking susceptible to the accounting anomalies of that quarter (such as changes in tax laws or restructuring costs) that may make one figure or the other unrepresentative of the business in general. Companies with quarterly EPS or revenue growth of more than 1,000% were excluded as outliers.
| Fastest-Growing Energy Stocks | ||||
|---|---|---|---|---|
| Price ($) | Market Cap ($B) | EPS Growth (%) | Revenue Growth (%) | |
| Vertex Energy Inc. (VTNR) | 6.41 | 0.5 | N/A (see company description) | 827.2 |
| Energy Fuels Inc. (UUUU) | 5.71 | 0.9 | N/A (see company description) | 567.8 |
| Black Stone Minerals LP (BSM) | 15.54 | 3.3 | N/A (see company description) | 379.3 |
Source: YCharts
- Vertex Energy Inc.: A petroleum refining company that produces and distributes both conventional and alternative fuels, including those based off of recycled industrial waste streams. For the first quarter of 2023, Vertex completed its renewable diesel (RD) conversion project and achieved significant increases in revenue for both refined and re-refined products. The company doesn’t have an EPS growth figure above because its EPS swung to positive from negative over the period in question.
- Energy Fuels Inc.: It is a critical minerals company and the leading producer of uranium in the U.S. It mines uranium and produces concentrates for sale to nuclear utilities. Energy Fuels’ revenue surged based on the sale of $18.5 million of uranium concentrate to the newly established U.S. Uranium Reserve. It doesn’t have an EPS growth figure in the table above because EPS swung to positive from negative over the period in question.
- Black Stone Minerals LP: Black Stone Minerals owns oil and natural gas mineral interests in 41 states. The company’s revenue climbed in the most recent quarter after significant losses on commodity derivative interests in the first quarter of 2022. Black Stone doesn’t have an EPS growth figure in the table above because EPS swung to positive from negative over the period in question.
Energy Stocks With the Most Momentum
These are the energy stocks that had the highest total return over the past 12 months.
| Energy Stocks With the Most Momentum | |||
|---|---|---|---|
| Price ($) | Market Cap ($B) | 12-Month Trailing Total Return (%) | |
| Shawcor Ltd. (SCL.TO) | CA$15.97 | CA$1.1 | 147.2 |
| YPF SA (YPF) | 11.28 | 4.4 | 142.1 |
| TORM PLC (TRMD) | 25.59 | 2.1 | 122.1 |
| Russell 1000 Index | N/A | N/A | 2.5 |
| Energy Select Sector SPDR ETF (XLE) | N/A | N/A | -11.7 |
Source: YCharts
- Shawcor: It is a Canadian material sciences company serving the energy market. Shawcor provides fixed and mobile manufacturing services, pipe and pipeline services, and other infrastructure products. The company’s shares have surged amid news of a South American development project.
- YPF: An Argentine oil and gas company that is predominantly state-owned. It explores, produces, transports, refines, and sells a variety of oil and gas products. YPF’s YOY top- and bottom-line growth has been robust in spite of rampant inflation in Argentina.
- TORM: This is a tanker company engaging in the transportation of oil products worldwide, while also developing and producing green marine equipment. Russia’s invasion of Ukraine in 2022 boosted tanker stocks as countries around the world levied sanctions against Russia’s energy industry, leading to a spike in oil prices.
Advantages of Investing in Energy Stocks
Two key reasons to invest in the energy sector are the size of the market and the sector’s recent returns.
Size of the market: Given that the world relies on energy to power everything from cars to factories and just about everything in between, it’s not surprising that the value of the global energy market in recent years has been calculated at around $6 trillion. The energy market also offers many subindustries to invest in, including exploration, storage, renewables, production, transportation, and distribution.
Growth potential: The United Nations (UN) estimates the world needs to invest $2.4 trillion a year through 2035 in energy systems to achieve the Paris Climate Agreement goals. The global transition to renewable energy from fossil fuels presents investors with an opportunity to invest in upstart energy companies pursuing share in a huge market.
Risks of Investing in Energy Stocks
Energy stocks also come with potential downsides. Two industrywide risks to consider are:
Shift away from fossil fuels: Climate change awareness and an increased focus on environmental, social, and governance (ESG) investing practices could threaten the viability of traditional energy companies over the longer term. The U.S. Environmental Protection Agency (EPA) says that climate change could contribute to strains on the energy system, challenges with energy distribution, and disruptions to the overall energy industry, among other challenges.
Environmental accidents: Occasionally, energy companies may experience high-profile environmental accidents. These not only are damaging from a public relations perspective but can hobble business and company finances as well. The April 2010 Deepwater Horizon oil well explosion and spill led BP PLC (BP) to pay billions in settlements and penalties in subsequent years.
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As of the date this article was written, the author does not own any of the above stocks.
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