In this article, we will take a look at the 10 best fuel stocks to buy now. To skip our analysis of the recent market trends and activity, you can go directly to see the 5 Best Fuel Stocks to Buy Now.
The energy sector, dominated by non-renewable energy or fossil fuels, runs the engine of the global economy. The sector covers different energy sources including oil, coal, natural gas, electricity, and renewable energy sources, as well as different stages of providing energy including exploration, production, transportation, and marketing.
The energy sector is poised for further growth in the short to medium term due to supply chain disruption in the form of sanctions on Russian oil and gas, and recently announced 2 MMBPD production cuts by OPEC+ nations. The global demand is also expected to sustain based on the re-opening of Chinese economy.
The Energy Select Sector SPDR Fund, which tracks the energy sector of S&P 500 Index and comprises of 23 leading energy companies in the U.S., is up nearly 34% year-to-date and 44% during the last 12 months, as of September 30, 2022.
Energy stocks have a history of paying a significant portion of their income to shareholders in the form of dividends. In times of good profitability for energy companies, they have some of the highest dividend yields as described in the later part of this article. Pioneer Natural Resources Company (NYSE:PXD), Devon Energy Corporation (NYSE:DVN), ConocoPhillips (NYSE:COP), Exxon Mobil Corporation (NYSE:XOM), and Chevron Corporation (NYSE:CVX) had the highest dividend yields on our list.
Photo by Zbynek Burival on Unsplash
Methodology
We shortlisted the stocks of top oil and gas companies that exhibited a mix of industry leadership, strong fundamentals, growth potential, analyst sentiment, and dividend yields. We sorted these stocks based on the number of hedge funds invested in them at the end of Q2 2022.
10 Best Fuel Stocks to Buy Now
10. EOG Resources, Inc. (NYSE:EOG)
Number of Hedge Fund Holders: 43
Houston, Texas-based EOG Resources, Inc. (NYSE:EOG) is one of the largest crude oil and natural gas exploration and production companies in the United States with proven reserves in the United States and Trinidad. As of December 31, 2021, its total estimated net proven reserves were 3,747 million barrels of oil equivalent, comprised of 41% crude oil and condensate, 22% natural gas liquids and 37% natural gas.
EOG Resources, Inc. (NYSE:EOG) has consistently made regular dividend payments for more than 20 years. On September 29, the board of directors of the energy company declared a dividend of $0.75 per common share. Its shares currently have a dividend yield of 2.22%.
EOG Resources, Inc. (NYSE:EOG) has ramped up its production in recent years and currently has a total daily production of 920.7 MBoed, up from 829 MBoed in 2021.
Analysts are also bullish about the potential of EOG Resources, Inc. (NYSE:EOG) shares as a majority of them hold ‘Buy’ rating for its shares. On October 19, Jefferies analyst Lloyd Byrne initiated coverage of EOG Resources, Inc. (NYSE:EOG) shares with a price target of $158 and a ‘Buy’ rating.
As of Q2 2022, 43 of the 895 hedge funds tracked by Insider Monkey held EOG Resources, Inc. (NYSE:EOG) shares valued at a combined total of 993 million. Harris Associates was its largest hedge fund shareholder with ownership of 7.6 million shares valued at $838 million.
9. Marathon Petroleum Corporation (NYSE:MPC)
Number of Hedge Fund Holders: 50
Findlay, Ohio-based Marathon Petroleum Corporation (NYSE:MPC) is a leading, integrated, downstream energy company operating the largest refining system in the US with 2.9 million bpd refining capacity. It also operates in the midstream business through its stake in MPLX LP (NYSE:MPLX).
Marathon Petroleum Corporation (NYSE:MPC) completed the sale of Speedway, a retail convenience stores chain operator, to 7-Eleven, Inc. for $ 21 billion in May 2021. The transaction generated approximately $17.22 billion of after-tax cash proceeds and led to a $15 billion capital return program.
Marathon Petroleum Corporation (NYSE:MPC) has also paid regular dividends since its spinoff in 2011. In July, the company declared a regular quarterly cash dividend of $0.58 per common share. The share repurchase plan, combined with the current dividend yield of 2.08%, offers significant value for shareholders.
On October 10, Barclays analyst Theresa Chan raised the target price on Marathon Petroleum Corporation (NYSE:MPC) shares to $126 from $112 with an ‘Overweight’ rating, citing expectations of “solid” results for Q3 which could result in additional share repurchases.
Marathon Petroleum Corporation (NYSE:MPC) shares were held by 50 of the 895 hedge funds tracked by Insider Monkey, as of Q2 2022, with the total hedge fund holdings valued at $2.7 billion. Its largest hedge fund shareholder was Paul Singer’s Elliott Management with ownership of 11.1 million shares valued at $909 million.
8. EQT Corporation (NYSE:EQT)
Number of Hedge Fund Holders: 52
Based in Pittsburgh, Pennsylvania, EQT Corporation (NYSE:EQT) is a leading independent natural gas producer with operations in Pennsylvania, West Virginia, and Ohio. It is the largest natural gas producer in the United States and had 25.0 trillion cubic feet of natural gas equivalents of proven natural gas, NGLs and crude oil reserves as of December 31, 2022.
EQT Corporation (NYSE:EQT) announced in September that it had agreed to acquire Tug Hill’s upstream assets and XcL Midstream’s gathering and processing assets for total consideration of $5.2 billion. The company also announced the increase of its share repurchase program to $2.0 billion from $1.0 billion, and year-end 2023 debt reduction target to $4.0 billion
On October 20, EQT Corporation (NYSE:EQT) declared a quarterly cash dividend of $0.15 per share. The company has regularly paid dividends for more than 20 years and its shares currently have a dividend yield of 1.58%.
On October 18, Piper Sandler analyst Mark Lear had raised the price target on EQT Corporation (NYSE:EQT) shares to $65 from $60 and maintained an ‘Overweight’ rating on the shares. The analyst cited the potential for solid results for the company in Q3 based on the oil price resurgence following OPEC+ production cuts.
As of Q2 2022, 52 hedge funds tracked by Insider Monkey held shares of EQT Corporation (NYSE:EQT), worth $2.3 billion. Dan Loeb’s Third Point is its largest hedge fund shareholder with ownership of 7.5 million shares valued at $259 million.
7. Diamondback Energy, Inc. (NASDAQ:FANG)
Number of Hedge Fund Holders: 54
Midland, Texas-based Diamondback Energy, Inc. (NASDAQ:FANG) is an independent oil and natural gas company focused on onshore oil and natural gas exploration in the Permian Basin in West Texas.
On October 11, Diamondback Energy, Inc. (NASDAQ:FANG) announced that it had agreed to acquire all leasehold interest and related assets of FireBird Energy LLC for a stock and cash consideration of approximately $1.6 billion.
Following the announcement, Piper Sandler analyst Mark Lear raised the price target on Diamondback Energy, Inc. (NASDAQ:FANG) shares to $209 from $193 and maintained an ‘Overweight’ rating on the shares. The analyst estimates the acquisition to be 7% accretive to 2023 earnings.
Previously in June, Diamondback Energy, Inc. (NASDAQ:FANG) announced that its board has approven the company’s commitment to return at least 75% of the free cash flow to its shareholders through base dividends, variable dividends and share repurchases.
As part of the plan, the company increased its base quarterly dividend by 7% to $0.75 per share and also announced a variable dividend of $2.30 per share.
As of Q2 2022, 54 of the 895 hedge funds tracked by Insider Monkey held shares of Diamondback Energy, Inc. (NASDAQ:FANG), worth $811 million. Ken Griffin’s Citadel Investment Group was its largest shareholder.
6. Pioneer Natural Resources Company (NYSE:PXD)
Number of Hedge Fund Holders: 56
Pioneer Natural Resources Company (NYSE:PXD) is a leading independent oil and natural gas exploration and production company operating in the Permian Basin in Texas.
Pioneer Natural Resources Company (NYSE:PXD) stands apart from other energy stocks based on the largest acreage position in the Midland Basin. It had estimated proven reserves of 2,222 million barrels of oil equivalent, comprised of oil, natural gas liquids and natural gas, as of December 31, 2021.
Pioneer Natural Resources Company (NYSE:PXD) also pays regular dividends and has recently increased its quarterly dividend by 40% to $1.10 per share and also declared a variable dividend of $7.47 per share. Its shares currently have a dividend yield of 10.15%.
On October 18, Piper Sandler analyst Mark Lear raised the price target on Pioneer Natural Resources Company (NYSE:PXD) shares to $346 from $311 and maintained an ‘Overweight’ rating on the shares based on the recent upturn in the oil market.
As of Q2 2022, Pioneer Natural Resources Company (NYSE:PXD) shares were held by 56 out of 895 hedge funds tracked by Insider Monkey with a total value of $696 million. Its largest shareholder was Ken Griffin’s Citadel Investment Group.
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Disclosure: None. 10 Best Fuel Stocks to Buy Now is originally published on Insider Monkey.