In this article, we discuss the 10 oil and gas stocks to buy according to Ray Dalio. If you want to skip the detailed analysis of Ray Dalio’s investment portfolio and investment philosophy, go directly to 5 Oil and Gas Stocks to Buy According to Ray Dalio.
Raymond Thomas Dalio is an American billionaire, philanthropist, and the founder of Bridgewater Associates. He is known to be one of the greatest innovators in the finance world. According to Forbes, Ray Dalio is worth $22 billion as of August 2022.
Investment Philosophy
At the age of 12, Ray Dalio was caddying at The Links Golf Club in New York where he constantly interacted with Wall Street investors. He invested his first $300 in Northeast Airlines, which tripled his investment due to a merger.
Ray Dalio’s most famous investment strategy revolves around macro focus. He employs multiple strategies and allocates capital to each of them according to the current economic factors. He calls it risk parity, which means allocating capital based on risk.
Another one of Ray Dalio’s philosophies includes the “All Weather Portfolio”. Its main purpose is to create a portfolio to be stable in any and all economic conditions as Dalio believes that inflation, deflation, and the rise and fall of economic growth impact investment portfolios.
Moreover, Ray Dalio suggests investors diversify investments across 15 or more unrelated assets to reduce the risk-to-return ratio. He does not believe in the buy-and-hold philosophy and believes that investors should take profits on fully priced stocks. The two investments Ray Dalio tends to avoid are cash and bonds.
Bridgewater Associates
Ray Dalio founded Bridgewater Associates in 1975. The fund serves institutional clients such as pension funds, endowments, foundations, foreign governments, and central banks. According to Ray Dalio, Bridgewater Associates is a “global macro firm” and uses quantitative investment methods, especially to stay clear of unrealistic historical models.
Bridgewater Associates is the world’s largest hedge fund with $235.5 billion in discretionary assets under management. The firm’s Q2 13F holdings are valued at $23.598 billion, down from $24.8 billion in the previous quarter. In the second quarter of 2022, the firm made 116 new purchases and sold off 99 stocks. Furthermore, the fund increased its holdings in 612 stocks and reduced its stake in 256 stocks. In this article, we will discuss the oil and gas stocks in Bridgewater Associates’ Q2 13F portfolio. The firm significantly increased its holdings in most of these stocks.
Exxon Mobil Corporation (NYSE:XOM), Chevron Corporation (NYSE:CVX), and ConocoPhillips (NYSE:COP) are some of the notable oil and gas stocks in Ray Dalio’s portfolio.
Our Methodology
These oil and gas stocks were picked from Bridgewater Associates’ Q2 13F portfolio. For further understanding of the readers, financial reports, analyst ratings, and dividend history of these stocks has also been discussed.
The hedge fund sentiment was taken from Insider Monkey’s second quarter database of 895 hedge funds.
Oil and Gas Stocks to Buy According to Ray Dalio
10. Sempra (NYSE:SRE)
Number of Hedge Fund Holders: 29
Sempra (NYSE:SRE) is a California-based energy infrastructure company. It provides electric and natural gas services to nearly 40 million customers in North America. According to the Q2 2022 13F filings, Bridgewater Associates owned 142,439 shares of the company, valued at $21.404 million, representing a 0.09% concentration in the portfolio.
The company expects its utility rate base to grow from $41 billion in 2021 to $62 billion in 2026, representing an average growth rate of 8.6%. Additionally, the company has a 5-year investment plan of $36 billion, which will help it grow the base rate in Texas and California by 8% and 9%, respectively. Subsequently, the company expects to grow its EPS by 6%-8% per year on average until 2026.
In mid-July, ConocoPhillips (NYSE:COP) announced its partnership with Sempra (NYSE:SRE) in the development of a large-scale LNG facility. ConocoPhillips has entered into a Heads of Agreement with Sempra Infrastructure in a 30% acquisition of direct equity holding in Port Arthur Liquefaction Holdings.
Exxon Mobil Corporation (NYSE:XOM), Chevron Corporation (NYSE:CVX), and ConocoPhillips (NYSE:COP) are some of the notable oil and gas stocks to buy according to Ray Dalio, along with Sempra (NYSE:SRE).
Here is what ClearBridge Investments had to say about Sempra (NYSE:SRE) in its Q1 2022 investor letter:
“Energy shortages in Europe were only intensified by the invasion. The conflict and economic sanctions against Russia have brought to the forefront EU dependence on Russian oil and natural gas. As Germany and its EU neighbors look to diversify their natural gas suppliers, some U.S. companies stand to benefit. Within the portfolio, Sempra Energy (NYSE:SRE) is well-positioned. Sempra’s previously underappreciated portfolio of infrastructure assets, with existing as well as prospective liquified natural gas (LNG) facilities, should benefit from renewed interest in U.S.-sourced LNG. The U.S. commitment to increase LNG exports to Europe over the coming years should create a favorable long-term demand environment and hopefully regulatory framework benefiting Sempra along with other natural gas and LNG suppliers. Sempra’s core utilities operations in California and Texas continue to generate solid mid- to high-single-digit earnings growth, and it enjoys additional growth opportunities from renewable natural gas (RNG), hydrogen and other renewable sources of energy.”
9. Cheniere Energy, Inc. (NYSE:LNG)
Number of Hedge Fund Holders: 65
Cheniere Energy, Inc. (NYSE:LNG) is a liquified natural gas company headquartered in Texas. In 2016, it became the first US company to export LNG. At the end of the second quarter of 2022, Icahn Capital LP was the most significant stakeholder of the company with 5.6 million shares, worth $746.51 million. As of Q2 2022, Bridgewater Associates increased its stake by 414% in Cheniere Energy, Inc. (NYSE:LNG). The fund owned 186,710 of the company shares, valued at $24.838 million, representing 0.1% of its portfolio.
In the second quarter of 2022, Cheniere Energy, Inc. (NYSE:LNG) missed its EPS estimates by $0.50 after posting an EPS of $2.90. However, the company recorded a 164.9% YoY growth in revenue, which came in at $8 billion, outperforming the consensus by $1.58 billion. Moreover, the company had previously made an LNG import deal with Chevron Corporation (NYSE:CVX), which was terminated following a one-time payment of $765 million by Chevron. Owing to this payment, Cheniere Energy, Inc. (NYSE:LNG) updated its FY 2022 adjusted EBITDA guidance to $9.8 billion-$10.3billion from $8.2 billion-$8.7 billion previously. In addition, the distributable cash flow outlook increased from $5.5 billion-$6 billion to $6.9 billion-$7.4 billion.
On August 16, Barclays analyst Marc Solecitto maintained an Overweight rating on Cheniere Energy, Inc. (NYSE:LNG)’s shares and raised the price target to $186 from $160.
Here is what ClearBridge Investments had to say about Cheniere Energy, Inc. in its Q3 2021 investor letter:
“Cheniere Energy is an energy infrastructure company that owns and operates U.S. liquefied natural gas (LNG) export facilities. Strong quarterly results and the disclosure of capital allocation policies were positively received by the markets. In addition, continued supply and demand tightness in the LNG market created a favorable commodity price environment.”
8. Marathon Petroleum Corporation (NYSE:MPC)
Number of Hedge Fund Holders: 50
Marathon Petroleum Corporation (NYSE:MPC) is an American company that refines, markets, and transports petroleum products. At the end of the second quarter of 2022, Bridgewater Associates owned 303,890 shares of the company shares, worth $24.98 million, representing 0.1% of the fund’s portfolio. As of August 18, Marathon Petroleum Corporation (NYSE:MPC)’s stock has been up by 53.50% on a YTD basis.
For the second quarter of 2022, Marathon Petroleum Corporation (NYSE:MPC) posted impressive results. The company generated a revenue of $53.8 billion, compared to $38.06 billion in the previous quarter. The company also made a significant leap in net income from the previous quarter’s $835 million to $5.87 billion in the second quarter of 2022. Moreover, the company exited the quarter with $13.32 billion in cash and generated a free cash flow of $6.45 billion.
On August 16, Barclays analyst Theresa Chen maintained an Overweight rating on Marathon Petroleum Corporation (NYSE:MPC)’s shares and raised her price target to $112 from $94. Chen, along with her colleague Marc Solecitto, believes that there are unique tailwinds within the North American midstream and refining coverage. They further added that the U.S refining fundamentals would do well in the absence of a severe economic shock.
Here is what Clark Street Value had to say about Marathon Petroleum Corporation (NYSE:MPC) in its Q4 2021 investor letter:
“During the worst of covid, I bought some LEAPs on Marathon Petroleum (MPC) as a proxy for Par Pacific (PARR) since long dated options weren’t available on the later. Those MPC calls expire next month and I’ll take profits, with PARR I’ve reduced my position throughout the year and might sell the rest early next year, I’ve owned it for 6-7 years and it has gone nowhere, they haven’t touched the NOLs, just a difficult business that I probably don’t understand as well as I should.”
7. Dominion Energy, Inc. (NYSE:D)
Number of Hedge Fund Holders: 30
Dominion Energy, Inc. (NYSE:D) is an American energy company that supplies electricity and natural gas across the United States. At the end of Q2 2022, the company covered 0.12% of Bridgewater Associates’ portfolio with 377,929 shares worth $30.16 million. In second the quarter, the most prominent stakeholder of the company was Diamond Hill Capital, with 3.29 million shares worth $262.85 million.
As of August 18, Dominion Energy, Inc. (NYSE:D) has a dividend yield of 3.12% compared to the 3.75% sector average. The next quarterly dividend of $0.6675 is payable by September 20 to the shareholders of record as of September 2.
On July 18, Barclays analyst Eric Beaumont maintained an Equal Weight rating on Dominion Energy, Inc. (NYSE:D)’s shares. The analyst lowered his price target on the stock to $86 from $93. Beaumont updated the price targets of the power and utility sector in North America to reflect expectations of a lower group multiple than previously used.
6. EOG Resources, Inc. (NYSE:EOG)
Number of Hedge Fund Holders: 43
EOG Resources, Inc. (NYSE:EOG) is an American hydrocarbon exploration company headquartered in Houston. Bridgewater Associates increased its activity in the company by 57% in Q2 2022, bringing its total stake to $32.54 million. EOG Resources, Inc. (NYSE:EOG) had a 0.13% concentration in the Bridgewater portfolio.
According to its Q2 2022 reports, EOG Resources, Inc. (NYSE:EOG) had an EPS of $2.74 versus $2.67 consensus and outperformed the revenue estimates of $6.14 billion after generating $7.4 billion. The company is working on a double premium strategy that generates a 60% return at $40 per barrel of oil and $2.50 per million cubic feet of gas. In its latest quarterly presentation, EOG Resources, Inc. (NYSE:EOG) revealed that the company is focused on rapid drilling to reduce the oil price required to generate at least 10% ROCE.
On August 18, Mizuho analyst Vincent Lovaglio reaffirmed a Buy rating on EOG Resources, Inc. (NYSE:EOG)’s shares and lowered the price target to $167 from $173. The analyst mentioned that his broader thesis for the exploration and production sector comes after the Q2 results.
EOG Resources, Inc. (NYSE:EOG) is one of the prominent oil and gas stocks to buy according to Ray Dalio, along with Exxon Mobil Corporation (NYSE:XOM), Chevron Corporation (NYSE:CVX), and ConocoPhillips (NYSE:COP)
EOG Resources, Inc. (NYSE:EOG) is one of the stocks mentioned by Oakmark Funds in its first-quarter 2022 investor letter. Here is what the firm said:
“EOG Resources (NYSE:EOG) (+36%), was among our top contributors in the quarter as oil prices rallied due to tight supplies, which were then exacerbated by the Russian invasion of Ukraine. Although their share prices have increased considerably, both companies still look quite undervalued even using longer term oil prices in the $65-70 dollar range. Meanwhile, if times are good over the next couple of years, we expect these companies to return significant percentages of their market caps to shareholders.”
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Disclosure: None. 10 Oil and Gas Stocks to Buy According to Ray Dalio is originally published on Insider Monkey.
