In this piece, we will take a look at ten best performing energy stocks in 2024.
The energy sector is poised for significant transformation in 2024, driven by a blend of evolving market dynamics, fluctuating commodity prices, and the growing influence of renewable energy sources. As we move deeper into the year, critical indicators reflect a landscape of opportunity and challenge for investors. Notably, Brent crude oil prices are projected to stabilize around $82 per barrel, a modest increase from $81 in 2023, signaling a return to pre-pandemic levels. Despite some volatility, market analysts expect that strategic production cuts by OPEC+ will sustain this upward trajectory, underscoring the intricate balance between supply and demand that will shape oil markets.
In tandem with oil prices, retail gasoline costs are forecasted to dip slightly, with an average price of $3.30 per gallon expected in both 2024 and 2025. This decrease, coupled with a projected increase in U.S. crude oil production from 12.9 million barrels per day in 2023 to 13.3 million in 2024, indicates a robust domestic supply environment. Moreover, the U.S. liquefied natural gas (LNG) sector is anticipated to grow, with gross exports expected to rise from 12 billion cubic feet per day in 2023 to 14 billion in 2025, highlighting the country’s role as a key player in global energy markets.
Natural gas, another crucial component of the energy portfolio, is also set for price fluctuations. The forecast indicates that prices at Henry Hub will remain relatively stable at around $2.20 per million British thermal units (MMBtu) before spiking to approximately $3.10/MMBtu in 2025. This trend reflects a complex interplay between production capabilities and increasing export demands, especially as the U.S. continues to expand its LNG footprint. Additionally, biomass-based diesel products are gaining traction, now accounting for 9% of total distillate fuel consumption, indicating a shift toward more sustainable fuel sources amidst rising environmental concerns.
Electricity generation in the U.S. is also undergoing a transformative phase, with significant contributions from renewable sources. Natural gas remains the dominant player, accounting for 42% of electricity generation, but renewables are gaining ground, rising from 21% in 2023 to a projected 25% in 2025. Solar energy, in particular, is experiencing explosive growth, driven by enhanced capacity and technological advancements. The first half of 2024 saw solar energy contribute to 59% of new generating capacity additions, primarily fueled by developments in battery storage technologies. States like Texas and California are expected to lead in solar generation, reflecting a broader trend toward green energy adoption.
These shifts in the energy landscape are underpinned by a steady economic backdrop, with the U.S. GDP projected to grow by 2.6% in 2024. However, it’s important to note that CO2 emissions are expected to hold steady at 4.8 billion metric tons, illustrating the ongoing challenge of balancing energy production with environmental stewardship. As the world grapples with climate change, energy companies are increasingly under pressure to innovate and transition to more sustainable practices.
Investors in energy stocks must navigate this evolving environment carefully. The interplay between traditional fossil fuels and renewable energy sources creates a unique set of investment opportunities and risks. While oil and gas companies are expected to benefit from higher prices and increased demand, those heavily invested in renewables may see significant growth as the transition to a low-carbon economy accelerates.
Recent geopolitical tensions, such as political instability in Libya, further complicate the picture. These events can lead to production outages, affecting global oil supply and prices. Despite these uncertainties, the fundamentals of the energy sector indicate promising opportunities for discerning investors. Ongoing production cuts from OPEC+ and strong demand from non-OECD countries signal a likely increase in oil consumption, further enhancing the attractiveness of energy stocks.
As we delve into the ten best-performing energy stocks for 2024, it’s crucial to consider these macroeconomic factors and industry trends. From traditional oil and gas giants to innovative renewable energy firms, the companies featured in this analysis are well-positioned to thrive amidst the changing landscape. Each stock represents a unique opportunity to capitalize on the anticipated shifts in energy consumption, production, and pricing, making them worthy of consideration for any forward-thinking investment portfolio.
In summary, the energy sector in 2024 is characterized by a blend of traditional and renewable energy sources, supported by favorable economic conditions and strategic industry developments. As we explore the ten best-performing energy stocks, we’ll analyze how these companies are adapting to the evolving landscape and positioning themselves for success in a rapidly changing world. The data and insights referenced here are sourced from the U.S. Energy Information Administration (EIA).
Wind turbines against a backdrop of the sky, signifying the power of renewable energy.
Our Methodology
For this article, to make our list of the best performing energy stocks in 2024, we ranked all publicly traded energy companies by their year to date share price performance as of September 25 and picked out the top 10 firms. The stocks are ranked in ascending order of their year-to-date performance.
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10. Viper Energy, Inc. (NASDAQ:VNOM)
Year to date Share Price Gain: 55.19%
Number of Hedge Fund Holders: 26
Viper Energy, Inc. (NASDAQ:VNOM) is recognized as one of the best-performing energy stocks of 2024, with a year-to-date share price gain of 55.19%. This strong performance can be attributed to the company’s robust financial fundamentals and operational efficiency, which have been key drivers of its sustained growth. The company’s strategic approach to production, capital allocation, and shareholder returns sets it apart in the energy sector, making it a top contender in the list of high-performing stocks.
During the second quarter of 2024, Viper Energy, Inc. (NASDAQ:VNOM) demonstrated remarkable operational and financial performance. Oil production increased by 4% compared to the previous quarter, while cash available for distribution rose by nearly 9%, signaling strong production efficiency and cash flow generation. The company’s focus on large-scale development projects, particularly through its high-concentration royalty acreage with Diamondback Energy, continues to pay off. Moreover, the company’s decision to increase its annual base dividend by 11% showcases its confidence in sustaining and growing shareholder returns, even in a fluctuating market environment.
Viper Energy, Inc. (NASDAQ:VNOM) cash margins and free cash flow conversion rate, which remains around 80%, underline the company’s ability to generate strong cash flow from its operations. Furthermore, the 14% growth in oil production per share over the past year emphasizes the company’s commitment to expanding its operational base while maintaining efficiency.
From a strategic standpoint, Viper Energy, Inc. (NASDAQ:VNOM) conversion to a Delaware corporation has significantly broadened its investor base, providing additional governance rights and increasing its visibility in the market. The company has been added to notable indices such as the Russell 1000, improving its liquidity and overall investor confidence.
With a breakeven price of below $30 WTI, Viper Energy, Inc. (NASDAQ:VNOM) has positioned itself as one of the most resilient players in the energy sector, capable of weathering price fluctuations while continuing to deliver value to shareholders. This strong financial footing, combined with a clear focus on operational growth and capital discipline, makes Viper Energy, Inc. (NASDAQ:VNOM) a top performer in the energy space for 2024.
Carillon Eagle Small Cap Growth Fund stated the following regarding Viper Energy, Inc. (NASDAQ:VNOM) in its first quarter 2024 investor letter:
“Viper Energy, Inc. (NASDAQ:VNOM) owns and acquires mineral and royalty interests in oil and natural gas properties primarily in the Permian Basin of West Texas and eastern New Mexico. The stock has had a solid run recently as it has benefitted both from the recent upward move in crude oil and from a recent sizable acquisition made by the company’s exploration and production parent. The company being acquired possesses a notable minerals portfolio, which has investors excited for the potential dropdown transaction opportunity for Viper.”
09. CNX Resources Corporation (NYSE:CNX)
Year to date Share Price Gain: 57.50%
Number of Hedge Fund Holders: 29
CNX Resources Corporation (NYSE:CNX), a key player in the natural gas industry, has shown remarkable performance in 2024, making it one of the best-performing energy stocks this year. With a year-to-date share price gain of 57.50%, CNX Resources Corporation (NYSE:CNX) has consistently outperformed its peers, driven by strong financial results and a diversified operational footprint in the Appalachian Basin. The company’s robust fundamentals, including its efficient natural gas extraction and processing capabilities, make it a compelling choice for energy investors seeking growth.
CNX Resources Corporation (NYSE:CNX) reported a significant earnings beat in Q2 2024, with earnings per share (EPS) of $0.36, surpassing analysts’ expectations of $0.27. This performance was supported by its strong natural gas production, particularly in its Shale and Coalbed Methane (CBM) segments. The company produced 4.5 billion cubic feet (Bcf) of natural gas in Q2, keeping in line with its full-year guidance of 15-18 Bcf, indicating a stable production outlook for the rest of the year.
The company’s ability to consistently generate free cash flow, estimated at $75 million for 2024, is a key financial strength. CNX Resources Corporation (NYSE:CNX) focus on cost efficiency, particularly in its deep Utica wells, has ensured that operational costs remain in line with expectations, further bolstering its bottom line. Moreover, its investments in water sourcing and handling services have started yielding positive results, contributing an additional revenue stream from third-party contracts.
On the technology front, CNX Resources Corporation (NYSE:CNX) innovative solutions like the AutoSep technology, which enhances oil and gas production while reducing costs and emissions, have the potential to drive future growth. The company’s compressed natural gas (CNG) initiative also opens new avenues for industrial and power generation applications, providing further opportunities for revenue diversification.
In summary, CNX Resources Corporation (NYSE:CNX) strong financial performance, focus on operational efficiency, and technological innovation position it as a top choice among energy stocks in 2024. Its consistent production and cash flow generation make it an attractive investment in the energy sector.
Longleaf Partners Fund stated the following regarding CNX Resources Corporation (NYSE:CNX) in its first quarter 2024 investor letter:
“CNX Resources Corporation (NYSE:CNX) – Natural gas company CNX Resources was another top performer in the quarter. It has been a tough natural gas price environment over the last several months, but CNX came into this year more hedged than peers and with a strong balance sheet that has funded continued share repurchase at a double-digit annualized pace. The company is also executing well operationally. Our partners CEO Nick DeIuliis and Chairman Will Thorndike continue focusing on growing long term FCF and value per share. The quarter saw EQT, a larger competitor in the Appalachian basin, decide to recombine its pipeline business with its upstream business. CNX had already done this in 2020 at what we believe was a better time and a better price, so it was nice to see additional validation of this decision. CNX remains very discounted and one of our stronger value growers over the last few years, which is why we added to our position earlier in the quarter when it was trading at a larger discount.”