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The energy sector consists of stocks related to the production and supply of energy around the world. Among energy sector companies are upstream firms—those involved in the exploration and production of oil or gas reserves—like EOG Resources (EOG). Also in the sector are downstream companies that refine and process oil and gas products for delivery to consumers, including HollyFrontier (HFC).
2019 has been a difficult year for the energy sector. It has only managed to eke out gains of about 9.54%, (per the XLE ETF total return, year-to-date) as compared with 24.8% gains in the S&P 500 over the same period. Nonetheless, in spite of challenges facing the sector as a whole, some individual companies have thrived. Below we’ll look at the top 3 energy sector 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 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.
|Best Value Energy Stocks|
|Price ($)||Market Cap ($B)||12-Month Trailing P/E Ratio|
|Devon Energy Corp. (DVN)||22.57||9.1||2.80|
|Cimarex Energy Co. (XEC)||47.07||4.8||7.58|
- Devon Energy Corp. (DVN)
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 a Q3 2019 earnings report on November 5, 2019, Devon Energy reported a significant decrease in profit on an annualized basis, owing in large part to the sale of its position in pipeline operator EnLink Midstream in Q3 2018.
- Cimarex Energy Co. (XEC)
Denver-based upstream company Cimarex Energy is also focused on oil and gas exploration. Like Devon Energy, Cimarex focuses its operations primarily in the central U.S. Cimarex recently posted Q3 2019 earnings per share below analyst expectations and down more than 50% from the prior year. Q3 revenue was down year-over-year as well, although Cimarex did beat analyst expectations in that area for the most recent quarter.
- ConocoPhillips (COP)
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 $8.4 billion in these areas, which may help it to pivot toward a greater focus on renewable energy.
Fastest Growing Energy Stocks
These are the energy sector stocks with the highest year-over-year (YoY) earnings per share growth for the most recent quarter. Rising earnings show that a company’s business is growing and is generating more money that it can reinvest or return to shareholders.
|Fastest Growing Energy Stocks|
|Price ($)||Market Cap ($B)||Normal Diluted EPS Growth (% YoY)|
|Kinder Morgan Inc. (KMI)||20.56||46.6||152.3|
|Marathon Oil Corp. (MRO)||12.52||10.1||133.3|
|Williams Companies Inc. (WMB)||23.33||28.3||90.0|
- Kinder Morgan (KMI)
Kinder Morgan focuses on midstream oil services, meaning it owns and control pipelines used to transport various gas and oil products. Kinder Morgan’s operations are active across more than 150 terminals connected by some 85,000 miles of pipeline. This network may soon grow larger, as Kinder Morgan works to finalize a deal to purchase the Southcross Energy’s pipeline system.
- Marathon Oil (MRO)
Marathon Oil is an exploration and production company. Earlier this month, Marathon reported last quarter earnings per share about 250% higher than analysts had expected.
- Williams Companies (WMB)
Williams Companies is an integrated energy company that does both the exploration and production of oil and gas, as well as its transportation.
Energy Stocks With the Most Momentum
These are the energy sector stocks that had the highest total return over the last 12 months.
|12-Month Trailing Return for the Top Momentum Stocks, the S&P 500, and the XLE ETF|
|Price ($)||Market Cap ($B)||12-Month Trailing Total Return (%)|
|Kinder Morgan Inc. (KMI)||20.56||46.6||27.93|
|Hess Corp. (HES)||69.24||21.1||25.04|
|Phillips 66 (PSX)||118.54||52.7||24.14|
- Kinder Morgan Inc. (KMI)
Besides being the fastest growing energy stock, Kinder Morgan also tops the charts in momentum.
- Hess (HES)
Another integrated energy company, Hess is involved at all stages of oil and natural gas development. Hess has operations around the world.
- Phillips 66 (PSX)
Phillips 66 operates refineries, gas stations, and production facilities in some 65 countries around the globe. This company had a particularly strong October, with its stock price rising by more than 15% that month.
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