We believe everyone should be able to make financial decisions with confidence. Crude oil is a naturally occurring, unrefined petroleum product composed of hydrocarbon deposits and other organic materials. In his current role at Kiplinger, Dan writes about equities, fixed income, currencies, commodities, funds, macroeconomics, demographics, real estate, cost of living indexes and more. Of the 28 analysts issuing ratings on FANG tracked by S&P Global Market Intelligence, 16 call it a Strong Buy, eight say Buy, three have it at Hold and one calls it a Sell. That works out to a consensus recommendation of Buy, with very high conviction.
Of the 26 analysts covering COP tracked by S&P Global Market Intelligence, 12 rate it at Strong Buy, seven say Buy, six have it at Hold and one slaps a rare Sell rating on shares. At its peak, Willow is expected to produce a sum of oil equivalent to nearly 40% of the state’s current oil production, Freeman writes. Schlumberger — Strong Buy, based on 8 analyst ratings, 8 Buy, 0 Hold, and 0 Sell. EOG Resources — Strong Buy, based on 21 analyst ratings, 18 Buy, 3 Hold, and 0 Sell. Conocophillips — Strong Buy, based on 17 analyst ratings, 13 Buy, 4 Hold, and 0 Sell. Go to the Stock Comparison tool to compare more stocks on key indicators.
Our estimates are based on past market performance, and past performance is not a guarantee of future performance. Some important pipeline flows of natural gas in retribution for imposing energy sanctions backed by the USA. He’s worked on his investing website dealing with topics such as the stock market and financial advice for beginners.
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Additionally, investors must consider the implications of climate change on the long-term prospects of oil and gas. The energy sector is undergoing a massive transition to renewable energy. Even so, that doesn’t mean there are few opportunities in the oil patch. Here’s a closer look at some of the top oil stocks and factors to consider before buying oil stocks. Overall, though, it’s important to remember that oil stocks, like the companies they represent, will likely do better if oil prices are high. And their long-term outlook is deeply enmeshed with geopolitical, economic and regulatory factors beyond any one company’s control.
The low debt and high cash reserves mean it has ample capital to invest in expansion projects, including renewable fuels. Thanks to its large-scale, vertically integrated operations, Phillips 66 is among the lowest-cost refiners in the industry. Enbridge’s pipeline operations generate stable cash flow backed by long-term contracts and government-regulated rates. That gives it the cash to pay a high-yield dividend while also investing to expand its energy infrastructure operations. Enbridge operates one of the biggest oil pipeline systems in the world. Enbridge also has an extensive natural gas pipeline system, a natural gas utility business, and renewable energy operations.
The company launched an industry-first, fixed-plus-variable dividend framework in 2021. It pays out as much as 50% of its excess cash flow each quarter via variable dividend payments after funding its fixed base dividend and capital expenses. Devon uses the rest of its excess cash to strengthen its balance sheet and repurchase shares.
Enterprise is particularly dominant in the NGL market and is one of the few MLPs that provide midstream services across the full hydrocarbon value chain. These are the oil and gas stocks with the lowest 12-month trailingprice-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.
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Before investing in any oil stocks, you need to find the right brokerage account for your investments. Most major online discount brokers have access to the oil company shares you’re looking for, but beware of fees and commissions. Almost all brokers are commission-free for stocks and ETFs now, and most require no minimums to open an account.
Given the uncertainty surrounding future oil demand, ConocoPhillips plans to return a significant portion of its free cash flow to investors in the coming years. It plans to pay a steadily growing dividend, repurchase shares, and pay a variable return of cash based on its excess cash. ConocoPhillips benefits from scale and access to some of the lowest-cost oil on earth, which includes significant exposure to the Permian Basin. It bulked up its position in that low-cost, oil-rich region in 2021 by acquiring Concho Resources and Shell’s assets in the area. With average costs of about $40 per barrel and many of its resources even cheaper, it can make money in almost any oil market environment, enabling the company to generate lots of cash flow. However, the oil industry is highly competitive and volatile.
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Despite this, it has been the stock to own over the last year, even amid a sector where most stocks accelerated upwards. Combined with the European angle is the fact that the company has a relatively low forward P/E. This implies a decent entry point, at least relatively speaking, for a stock which has risen solidly over the last year. Neither the author nor editor held positions in the aforementioned investments at the time of publication. Many or all of the products featured here are from our partners who compensate us. This influences which products we write about and where and how the product appears on a page.
Crude oil prices went flying shortly after the Russian invasion of Ukraine to around $119 per barrel on March 6 due to sanctions on Russian fossil fuel imports by the USA and part of Europe. However, the prices have dropped down to the pre-war levels with crude oil trading at around $74 per barrel WTI. Bulls cite FANG’s compelling valuation – as well as management’s commitment to returning cash to shareholders through buybacks and dividends – as just a few reasons to be constructive on the name. Importantly, with U.S. producers prioritizing returning cash to shareholders over expanding production, the OPEC+ cuts will have real bite, note Stifel analysts Derrick Whitfield and Nate Pendleton. The production cut announced by the Organization of the Petroleum Exporting Countries and its allies (OPEC+) has dramatically changed the outlook for oil prices in 2023 and beyond, analysts say. Information provided on Forbes Advisor is for educational purposes only.
However, the stock buyback program has been consistent, bringing total shareholder yield up to more than 7% over the same period. It takes raw crude oil and produces refined petroleum products, like gasoline and jet fuel. Its operations vary from processing and transportation to storing and marketing fuels. ExxonMobil is the largest publicly traded oil company on earth.
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While oil and gas is a comparatively risky sector, some companies are safer than others. Petroleum-based fuels and natural gas usually have a cost advantage over other heating and transportation fuels, and they have a massive infrastructure advantage over emerging clean energy fuels. That said, the industry also has some negative features that increase risk for investors. Many of the largest oil companies like ExxonMobil are known as integrated oil producers since they have branches involved in upstream, midstream and downstream operations. When buying oil companies, be sure to understand what sector of the industry they reside in.
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The global crude oil market has been on a rollercoaster ride over the last year. Oil hit a 14-year high of $120 in the wake of Russia’s invasion of Ukraine, but since then prices have steadily fallen below $80 a barrel. The investing information provided on this page is for educational purposes only. NerdWallet does not offer advisory or brokerage services, nor does it recommend or advise investors to buy or sell particular stocks, securities or other investments.
Best-performing oil stocks
Oil has made headlines during this coronavirus crisis, although not for reasons investors want to see. In addition to issues caused by international events, especially those that impede the safe transport of natural resources. Even in a perfect work, this sector can be quite volatile as supply and demand are constantly shifting. That’s why it’s important to learn all you can about oil stocks.
The oil and gas industry is one of the most important and lucrative sectors in the world. Downstream operations are oil and gas functions that occur after the production phase to the point of sale. Meanwhile, the Street’s average price target of $172.97 gives FANG implied price upside of about 23% in the next 12 months or so. Add in the generous dividend yield of 8%, and FANG’s implied total return comes to more than 30%.
This has drawn criticism, but from a shareholder’s point of view, it has increased return. Companies that look and drill for oil are among the most volatile stocks in the oil space, Jones says, and their prices are very responsive to short-term trends. This can be a benefit if you buy at the right time or if the company you’re investing in makes a significant discovery of natural resources.
ExxonMobil has focused its recent efforts on reducing its business costs and boosting efficiency. One of the largest oil companies on the planet, ExxonMobil is a fully integrated supermajor. To help you identify the best oil stocks for your portfolio, Forbes Advisor has developed this list of steady performers that boast favorable performance metrics and strong balance sheets.