Even though both the S&P500 and the Nasdaq are down 8% and 12% consecutively, the energy sector held onto its momentum and has climbed 12% for 2022. The year looks good for oil and gas even though renewable energy hasn’t slowed down due to decarbonization coming at an estimated cost of over $100 trillion over the next 30 years. Oil and gas stocks are a hot prospect that investors should take advantage of. With non-renewable energy surging, we have selected five of the hottest stocks to consider.
NextEra Energy, Inc. (NEE:NYSE)
If there is one large-cap energy stock to keep an eye on, it’s NextEra Energy, Inc. The market-leading electric utility holding company delivers electricity to around 10 million people in the United States while also serving Canada. With natural gas, nuclear, oil, wind and solar energy generation capabilities, NextEra Energy confidently expressed that the company feels 2022 is going to be a fantastic year by lifting its profit forecast to $2.75 to $2.85 a share from $2.55 to $2.75 a share. Price targets for NEE average $91 with a high of $104 and a low estimate of $79, and both we and 21 other leading investment analysts consider NextEra Energy, Inc. to be a buy.
EOG Resources Inc. (EOG:NYSE)
For a dividend-paying oil stock with considerable momentum, consider investing in EOG Resource Inc. The Houston-based company not only raised its dividend after paying out a whopping $2.7 billion to shareholders but is also outperforming the gains of ExxonMobile and the United States Oil Fund ETF itself with 130% growth since January 2021. When considering a Discounted Cash Flow model-derived estimated February 2022 fair value of $169.87 for EOG assessing cash flow over a ten year period, the stock begins to look highly undervalued. Price forecasts for the year are averaging $118 across 32 analysts with a high of $136 and a low of $98, which is just 18% from its trading price midway through February and most definitely an attainable scenario.
The ConocoPhillips Company is an excellent momentum stock with strong growth over the last quarter. ConocoPhillips shares have climbed 25.73% over the last financial quarter and a total of 94.82% over a 12-month period. The company is far ahead of similar companies and outpaces the S&P 500’s meagre 16.96% share price rise over 2021. Furthermore, analysing industry analyst price targets reveals that experts have been steadily increasing their estimates with no downgrades to break the trend. We feel that COP’s momentum is enough to continue pushing it past its 52-week high attained on February 4th. While there’s always the chance of declining towards its low estimate of 77, we feel that the Houston-based corporation will smash through the 100 median target and reach closer to its high estimate of 120.
Ovintiv Inc. (OVV:NYSE)
Canada’s former largest energy and gas company, Ovintiv Inc., formerly traded as the Encana Corporation, is so confident that 2022 is a year of growth that it increased its quarterly earnings per share estimates. On February 11th, Evintiv raised its quarterly share earnings estimates to $3.66 per share from $3.50. Already this year, the company has expanded its presence in the Midland Basin by acquiring six more wells, and more revenue-producing assets are touted to be on the way.
Even though OVV is currently trading close to its 52-week high of $43.02, which was recently set, shares are still below the median target of $52. In fact, they’re currently trading on par with the low target, which leads us to suspect that Ovintiv is more likely to reach 12-month growth closer to its high of $70.
Oasis Petroleum (OAS:NASDAQ)
Following fantastic performance in 2021, Oasis Petroleum Inc. entered 2022 with excellent growing cash flow. Earnings per share forecasts from Capital One are up from $5.68 to $6.18 per share for the first quarter.
Many Wall Street analysts feel that OAS is overweight and have raised its price targets. Oasis Petroleum shared their capital plan and 2022 goals in February and are committed to returning $280M in capital to shareholders this year. A share buyback program is also on the way showing just how much Oasis believes it is undervalued.
The median 12-month price target falls at 171.50 after having increased from prior estimates of 138.56. After looking at Oasis Petroleum’s high production average of 2,198 Mmcfe (2,198 x one million cubic feet of natural gas equivalent) per day and over $500MM in free cash flow expected for 2022, we’re confident that OAS will deliver surprising growth far exceeding estimates.
Note: Please do not invest money or assets in the financial markets that you cannot afford to lose. This article should not be construed to be investment advice and is for information purposes only