12 Best Energy Stocks for 2022

Published on May 13, 2022 at 9:52 am by Omer Farooq in Hedge Funds, News

In this article, we will discuss the 12 best energy stocks for 2022. If you want to skip our detailed analysis of the energy sector which highlights key trends and major players, you can go directly to 5 Best Energy Stocks for 2022.

The energy sector has been the biggest contributor to skyrocketing inflation in 2022 and recorded the highest index rise this March. The energy index rose 11.0% in March following a 3.5% increase in February. The index for gasoline rose 18.3%, after a 6.6% hike in February. The index for electricity went up by 2.2% in March, and the index for natural gas rose 0.6% over the month. Overall, the energy index soared 32.0% over the past 12 months, the highest it has risen since August 1982, with all major energy component indices increasing. The index for gasoline rose 48.0% over the past twelve months, while the index for natural gas surged 21.6%. The index for electricity rose 11.1% in March.

Soaring Fuel Prices

According to The World Bank, energy prices are expected to surge over 50% in 2022 before settling in 2023 and 2024. The price of Brent crude oil is expected to average around $100 a barrel in 2022, the highest it has been since 2013 and up 40% since 2021, due to the current geopolitical situation which has caused businesses to pull out of Russia. Prices are expected to ease to $92 in 2023. Natural-gas prices are expected to record a two-fold increase in 2022 as compared to 2021, and coal prices are expected to soar 80% year over year in 2022 attaining a record high.

Energy Market Analysis: Key Trends and Major Players

According to IBIS World, the global oil & gas exploration & production industry is valued at $5.0 trillion in 2022 as of this March and is expected to go up by 27.5% by the end of the year. The global oil and gas market has recorded a median growth rate of 12.3% annually from 2017 to 2022.

The renewables sector is also contributing significantly to the global energy market, as concerns regarding climate change put alternative fuel options in front of governments to build a cleaner, greener, and carbon-free future. According to Fortune Business Insights, the global energy as a service market was valued at $59.17 billion in 2020 and $64.20 billion in 2021. The EaaS market is forecasted to grow to $124.10 billion by 2028, registering a CAGR of 9.9% over the forecasted period. This growth is primarily attributed to be driven by investments being poured into the renewables space and government initiatives being taken all across the world as part of a global green revolution.

Photo by Andreas Gücklhorn on Unsplash

Major players in the energy sector include Exxon Mobil Corporation (NYSE:XOM), ConocoPhillips (NYSE:COP), Cheniere Energy, Inc. (NYSE:LNG), and Chevron Corporation (NYSE:CVX).

Our Methodology

To determine the 12 best energy stocks for 2022, we studied market reports compiled by credible and leading market intelligence agencies. We identified the major players that are dominating the energy sector and did further research on them.

Along with each stock, we have mentioned relevant news, its most recent quarter’s earnings, and the analyst and investor sentiment around it. The hedge fund sentiment was derived from Insider Monkey’s database, which as of Q4 2021 keeps track of 924 elite hedge funds.

Best Energy Stocks for 2022

12. Clearway Energy, Inc. (NYSE:CWEN)

Number of Hedge Fund Holders: 21

Clearway Energy, Inc. (NYSE:CWEN) operates as a renewable energy company in the United States. The company’s thermal infrastructure assets provide steam, water, and electricity to businesses, universities, hospitals, and governmental units. As of December 31, 2021, Clearway Energy, Inc. (NYSE:CWEN) has a 1,370 MW thermal equivalent capacity of steam and chilled water.

By the end of the fourth quarter of 2021, 21 hedge funds were long Clearway Energy, Inc. (NYSE:CWEN) with combined stakes of $182.66 million. This is compared to 17 positions in the preceding quarter with stakes worth $151.65 million. The hedge fund sentiment for the stock is positive.

As of May 7, Clearway Energy, Inc. (NYSE:CWEN) has a potent forward dividend yield of 4.40% and has returned 18.67% to investors over the past twelve months. This is what makes Clearway Energy, Inc. (NYSE:CWEN) a high-momentum stock pick for investors looking to initiate or raise stakes in the energy sector.

As of December 31, 2021, Renaissance Technologies is the top shareholder in Clearway Energy, Inc. (NYSE:CWEN) owning more than 1.2 million shares of stock which amount to a stake of $41.05 million in the company.

ClearBridge Investments, an investment management firm, mentioned Clearway Energy, Inc. (NYSE:CWEN) in its fourth-quarter 2021 investor letter. Here is what the firm said:

“Clearway Energy primarily owns and operates contracted renewable generation assets. It also owns and operates conventional generation and thermal infrastructure assets. Clearway Energy’s share price continued to benefit from the completed sale of its thermal assets, which was above expectations, generating USD$1.3 billion in incremental proceeds. Additionally, there was optimism surrounding a stimulus bill passthrough which contains renewables subsidies.”

Like Exxon Mobil Corporation (NYSE:XOM), ConocoPhillips (NYSE:COP), Cheniere Energy, Inc. (NYSE:LNG), and Chevron Corporation (NYSE:CVX), Clearway Energy, Inc. (NYSE:CWEN) is a lucrative stock option to consider for investors looking to increase or initiate stakes in the energy sector.

11. Murphy Oil Corporation (NYSE:MUR)

Number of Hedge Fund Holders: 24

Murphy Oil Corporation (NYSE:MUR) explores and produces crude oil, natural gas, and natural gas liquids in the United States, Canada, and internationally. The stock is rising in popularity among analysts and investor circles. On April 21, Truist analyst Neal Dingmann raised his price target on Murphy Oil Corporation (NYSE:MUR) to $60 from $41 and reiterated a Buy rating on the shares.

On May 4, 2022, Murphy Oil Corporation (NYSE:MUR) reported solid earnings for the fiscal first quarter of 2022. The company registered an EPS of $0.73, beating expert estimates by $0.12. The company’s revenues grew by 45.52% year over year and came in at $552.96 million.

Murphy Oil Corporation (NYSE:MUR) appears to be trading at a discount at the moment while experiencing bullish trading volumes. As of May 7, the stock has surged by 94.36% over the past twelve months, offers a forward PE ratio of 7.76, and boasts a dividend yield of 1.88%. Robust earnings coupled with skyrocketing momentum and a low PE ratio make Murphy Oil Corporation (NYSE:MUR) one of the best value energy stocks to buy for 2022.

Insider Monkey identified Murphy Oil Corporation (NYSE:MUR) on 24 hedge fund portfolios at the close of Q4 2021. The total stakes of these funds were valued at $136.65 million. This is compared to 19 hedge funds in the prior quarter with combined stakes of $158.70 million.

According to Insider Monkey’s data, Pzena Investment Management is the leading stakeholder in Murphy Oil Corporation (NYSE:MUR) as of the end of last December. The fund’s stakes in the company were valued at $53.54 million, which accounts for 0.2% of its 13F portfolio.

10. SolarEdge Technologies, Inc. (NASDAQ:SEDG)

Number of Hedge Fund Holders: 34

SolarEdge Technologies, Inc. (NASDAQ:SEDG) provides technical solutions for solar photovoltaic installations worldwide. The company offers inverters, power optimizers, communication devices, and smart energy management solutions used in residential, commercial, and small utility-scale solar installations. The stock is experiencing bullishness from analysts. This May, Needham analyst Vikram Bagri raised his price target on SolarEdge Technologies, Inc. (NASDAQ:SEDG) to $390 from $347 and maintained a Buy rating on the shares.

On May 2, 2022, SolarEdge Technologies, Inc. (NASDAQ:SEDG) reported earnings for the fiscal first quarter of 2022. Demand for the company’s products is expected to remain strong in all markets and will drive the company’s shares. As of May 7, the stock has surged 14.25% over the past twelve months, making it a value stock option with increasing momentum, for investors trying to jump into the energy market.

SolarEdge Technologies, Inc. (NASDAQ:SEDG) was spotted on 34 hedge fund portfolios at the end of the fourth quarter of 2021. These funds held stakes worth roughly $766.59 million in the company, up from $594.46 million in the third quarter of 2021 with 33 positions. The hedge fund sentiment for the stock is positive.

Impax Asset Management was the most bullish hedge fund on SolarEdge Technologies, Inc. (NASDAQ:SEDG) at the end of the fourth quarter of 2021. The fund’s stakes in the company were valued at an astounding $210.8 million, which covers 0.77% of its investment portfolio.

Here is what ClearBridge Investments had to say about SolarEdge Technologies, Inc. (NASDAQ:SEDG) in its first-quarter 2022 investor letter:

“The Strategy is well-exposed to this secular shift and to accelerated spending on alternative energy sourcing and generation. Growth in renewables should benefit SolarEdge (NASDAQ:SEDG), a company we repurchased on weakness in the first quarter that develops electronics for solar installations and should take advantage of greater incentives for solar installations in many geographies. The company has expanded its products offering to address larger markets in commercial and utility solar on top of its traditional residential solar market.”

9. Marathon Oil Corporation (NYSE:MRO)

Number of Hedge Fund Holders: 40

Marathon Oil Corporation (NYSE:MRO) is recording exponential margin growth, benefitting from surging commodity prices. This May, Marathon Oil Corporation (NYSE:MRO) reported its quarterly revenues for the fiscal first quarter of 2022 came in at $1.75 billion, up 63.68% year over year from $1.07 billion. The company reported earnings per share of $1.02 for the quarter ending March 2022 and beat expert estimates by $0.04.

It is a great time to stack up Marathon Oil Corporation (NYSE:MRO) shares as they appear to be trading at a discount, making the stock rank ninth on the 12 best energy stocks to buy in 2022. As of May 7, the stock’s trailing twelve-month returns are up 136.75%, and it has a remarkably low PE ratio of 6.75.

Marathon Oil Corporation (NYSE:MRO) is rising in popularity among expert financial analysts. On April 21, Truist analyst Neal Dingmann raised his price target on Marathon Oil Corporation (NYSE:MRO) to $41 from $34 and reiterated a Buy rating on the shares.

Hedge funds are upping their stakes in Marathon Oil Corporation (NYSE:MRO). Insider Monkey found 40 hedge funds long Marathon Oil Corporation (NYSE:MRO) with combined stakes of $969.10 million at the end of Q4 2021. This is compared to 40 positions in Q3 2021, with stakes of $903.22 million.

As of December 31, 2021, Holocene Advisors is the dominating shareholder in Marathon Oil Corporation (NYSE:MRO) owning more than 9.37 million shares of stock which equate to a stake of $153.9 million, up 21% from the fund’s Q3 2021 stakes.

8. Shell Plc (NYSE:SHEL)

Number of Hedge Fund Holders: 41

Shell Plc (NYSE:SHEL) is experiencing bullish trading volumes and is gaining popularity among investor circles. The stock was held by 41 hedge funds at the end of the fourth quarter of 2021. The total stakes of these funds in the company were valued at $2.63 billion, up from $2.05 billion in Q3 2021 with 33 positions. The hedge fund sentiment for the stock is positive.

Shell Plc (NYSE:SHEL) is topping the charts and is delivering profits to investors. On May 5, the company reported earnings for the fiscal first quarter of 2022, in which it beat both EPS and revenue estimates. The company registered an EPS of $1.20 and beat estimates by $0.11. The company’s quarterly revenues were valued at $84.2 billion, up 51.2% year over year, and outperformed market estimates by $39.36 billion dollars. Shortly after, UBS analyst Henri Patricot raised his price target on Shell Plc (NYSE:SHEL) to 2,550 GBP from 2,450 GBP and maintained a Buy rating on the shares.

In addition to reporting robust earnings, Shell Plc (NYSE:SHEL) looks undervalued and is also one of the high gainers in the energy space. As of May 7, Shell Plc (NYSE:SHEL) has returned 60.43% to investors over the past twelve months and has a forward price-to-earnings ratio of 6.22. The company’s profitability, strong fundamentals, and undervalued nature make it a must-buy energy stock for 2022.

Ken Fisher’s Fisher Asset Management was the most prominent stakeholder in Shell Plc (NYSE:SHEL) at the close of Q4 2021. The fund’s stakes in the oil giant were valued at $813.12 million which represents 0.45% of its investment portfolio.

7. Enphase Energy, Inc. (NASDAQ:ENPH)

Number of Hedge Fund Holders: 50

Enphase Energy, Inc. (NASDAQ:ENPH) designs, develops, manufactures, and sells home energy solutions for the solar photovoltaic (PV) industry in the United States and internationally. The company is dedicated to becoming one of the most prominent names in the energy space and is actively working on expanding operations. Over the past few weeks, the company has announced expansions for battery storage and solar energy deployment at multiple locations. On April 28, the company announced installations of its IQ microinverters and batteries in Michigan. This May, Enphase Energy, Inc. (NASDAQ:ENPH) reported that the company’s residential solar energy systems are experiencing strong demand in the Netherlands.

Enphase Energy, Inc. (NASDAQ:ENPH) is soaring as demand for clean-energy systems rises amidst climate-change concerns. On April 26, the company reported revenues of $441.29 million for the fiscal first quarter of 2022 and beat estimates by $7.64 million. The company registered a quarterly EPS of $0.79 and beat estimates by $0.10. Moreover, as of May 7, Enphase Energy, Inc. (NASDAQ:ENPH) has appreciated by 34.91% over the past twelve months.

Analysts are expressing their bullishness for Enphase Energy, Inc. (NASDAQ:ENPH). On May 2, Truist analyst Bronson Fleig assumed coverage of Enphase Energy, Inc. (NASDAQ:ENPH) with a Buy rating and a $205 price target.

Enphase Energy, Inc. (NASDAQ:ENPH) is becoming a popular stock pick among elite hedge funds. 50 hedge funds held long positions in the company at the end of Q4 2021. These funds’ stakes were valued at $763.28 million, up from $637.78 million in the prior quarter with 52 positions.

D E Shaw was the leading stakeholder in Enphase Energy, Inc. (NASDAQ:ENPH) at the end of Q4 2021. The fund’s stakes were valued at $182.92 million, up 137% from its Q3 2021 stakes.

Enphase Energy, Inc. (NASDAQ:ENPH) is dedicated to delivering handsome returns to its investors. Other stocks that are experiencing bullish trading volumes include Exxon Mobil Corporation (NYSE:XOM), ConocoPhillips (NYSE:COP), Cheniere Energy, Inc. (NYSE:LNG), and Chevron Corporation (NYSE:CVX).

6. Devon Energy Corporation (NYSE:DVN)

Number of Hedge Fund Holders: 51

Devon Energy Corporation (NYSE:DVN) explores and refines oil, natural gas, and natural gas liquids in the United States. It operates approximately 5,134 gross wells. Hedge funds are betting high on Devon Energy Corporation (NYSE:DVN). Insider Monkey found 51 hedge funds that were bullish on the stock at the close of Q4 2021. The stakes of these funds totaled 1.74 billion, up from $1.40 billion in Q3 2021 with 48 positions. The hedge fund sentiment for the stock is positive.

This May, Devon Energy Corporation (NYSE:DVN) reported earnings for the fiscal first quarter of 2022 in which it generated revenues of $3.81 billion, beating market estimates by $242.30 million. The company registered an EPS of $1.88 and beat EPS estimates by $0.12.

On May 2, 2022, Devon Energy Corporation (NYSE:DVN) declared a fixed-plus-variable dividend of $1.27 per share, up 27% from the previous quarter, in light of the company’s market-beating first-quarter financial performance. The dividend is payable on June 30 to investors of record on June 13. Moreover, Devon Energy Corporation (NYSE:DVN) also expanded its share-repurchase authorization by 25% to $2 billion through May 4, 2023.

In addition to being eyed by hedge funds, Devon Energy Corporation (NYSE:DVN) is being green-lighted by expert financial analysts as well. This May, Truist analyst Neal Dingmann raised his price target on Devon Energy Corporation (NYSE:DVN) to $100 from $91 and reiterated a Buy rating on the shares. Dingmann contends that the company will continue its shareholder return program, leading with potent dividends along with handsome buybacks that are expected to drive its shares.

Devon Energy Corporation (NYSE:DVN) is gaining momentum in 2022, and as of May 7, the company’s shares have appreciated by 165.79% over the past twelve months. Moreover, the stock has an astounding forward yield of 7.29% and also appears to be undervalued, having a PE ratio of 8.30. The future for Devon Energy Corporation (NYSE:DVN) is bright, and it is ranked among the top 10 best energy stocks to buy in 2022.

GQG Partners was the most bullish hedge fund on Devon Energy Corporation (NYSE:DVN) at the end of last December. According to Insider Monkey’s data, the fund’s stakes in the company were approximately equal to $638.9 million, which covers 1.58% of its 13F portfolio.

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