In this article, we will take a detailed look at the 15 Best Oil Stocks to Buy According to Analysts. If you want to skip our detailed analysis and see the top 5 stocks in this list, click 5 Best Oil Stocks to Buy According to Analysts.
Despite the buzz and huge investments in the green energy space, oil and gas stocks remain on investors’ radar as economists expect the world’s energy appetite to grow significantly in the coming years amid growth and manufacturing boom. ExxonMobil CEO Darren Woods, while talking to Yahoo Finance, recently said that his company would still be producing oil and gas in 2050. However, Woods acknowledged that the industry dynamics may change significantly in the future.
Effect of AI Boom on the Energy Sector
In addition to economic growth in the long term, the energy sector has another major growth catalyst: AI and data centers. Morgan Stanley said in a report last month that it expects a 15% CAGR in data center power demand from 2023 through 2030. The report said data centers currently account for about 3% of the total power demand in the US. That figure could surge to 8% in 2030. Natural gas companies in the energy sector will be among the biggest beneficiaries of this boom. Goldman Sachs estimates that about 60% of the 47 GW of the required incremental power generation capacity will be fulfilled by gas.
Should You Invest in Oil Stocks? Outlook and Expectations
Last month, State Street Global Advisors said in a report that the energy sector is attractive again, driven by low valuations. The report said that oil prices will get support from global disruptions and geopolitical tensions. The report also said the supply cuts from OPEC+ led by Saudi Arabia will offset the increase in production from the US. State Street also believes Exxon Mobil Corp (NYSE:XOM)’s $60 billion deal to buy Pioneer could increase the oil sector’s earnings. State Street Global Advisors believes the capital discipline practiced by oil companies over the past few years have given a “meaningful” boost to cash flows in the industry. Oil companies took measures to tighten belt and cut costs amid a global shift towards green energy and changing industry dynamics. ExxonMobil’s CEO Darren Woods talked about the company’s cost savings and discipline in Q1 earnings call:
“… If you look at what we’ve been doing here in the $10 billion of structural cost savings that we’ve achieved to date, really has to do with the reorganizations that we started back in 2018, and the continued progress we make in centralizing activities. Finding areas of synergies and focusing on how we drive the most value out of those synergies. Eliminating areas of duplication. Taking expertise and experience that we’ve had in the past scattered across the corporation in different silos. Putting those into centralized organizations.
Getting the collective wisdom of that group and experience to focus on some of our toughest challenges. Part of that is making sure that we’re the lowest cost supplier, and so reducing cost is a big challenge that the organization’s looking at, and these experts are continuing to look for opportunities to optimize. To strike the balance of higher reliability, safer operations, while continuing to find efficiencies, and that’s exactly what they’ve been doing. I think it’s important to put the cost reductions in context that, as we’ve made these reductions, our reliability has improved. As we’ve made these reductions, our safety has improved. We have less injuries on our facilities all around the world. As we’ve made these reductions, our environmental performance has improved.
So it’s a great example of how we can do both of these things with the right experience and capabilities. I think where we’re just are at the early stages of last of quantifying the value and developing a clear line of sight to how we can take advantage of the most recent centralized organizations, we’ll be going through a plan process this year. Now that we’ve got those organizations in place and working with the rest of the businesses and the other centralized organizations to figure out what more can we bring to the table, but I’m extremely optimistic that not only will we hit the $15 billion, certainly by 2027, but I suspect we’ll find even more.”
Read the full earnings call transcript here.
Latest Developments for Oil Stocks
Oil stocks tumbled earlier this month after The U.S. Energy Information Administration reported a surprise jump in commercial crude oil stockpiles.
Oil companies are facing short-term turbulence amid geopolitical risks, inflation-related worries and recession fears. While oil stocks like Exxon Mobil Corp (NYSE:XOM) and Chevron Corp (NYSE:CVX) may face weakness in the short term, analysts believe long-term catalysts make oil stocks attractive for investors.
The S&P 500 Energy (SPN) is up 11% so far this year, while SPDR S&P Oil & Gas Exploration & Production ETF (XOP) has gained about 9% this year.
Photo by Zbynek Burival on Unsplash
Methodology
For this article, we first used a stock screener to identify oil stocks with Buy or better ratings from Wall Street analysts and price targets that are significantly higher than their current stock prices. From these stocks we chose 15 stocks with the highest upside potential based on their average analyst price estimates set by analysts.
15. TXO Partners LP (NYSE:TXO)
Average Analyst Price Target: $54.20609884
Upside Potential: 29.3%
TXO Partners LP (NYSE:TXO) is one of the best oil stock with upside potential according to Wall Street analysts. The stock has a dividend yield of about 12%. In March TXO Partners LP (NYSE:TXO) upped its dividend by 11.5%.
14. Gran Tierra Energy Inc (NYSE:GTE)
Average Analyst Price Target: $13.96
Upside Potential: 50.59331176%
Oil and gas company Gran Tierra Energy Inc (NYSE:GTE) shares have gained about a whopping 64% so far this year through May 9. Earlier this month Gran Tierra Energy Inc (NYSE:GTE) posted Q1 results. Revenue in the quarter jumped 9.6% year over year.
13. Adams Resources & Energy Inc (NYSE:AE)
Average Analyst Price Target: $43.5
Upside Potential: 51.62077379%
Adams Resources & Energy Inc (NYSE:AE) is a dividend-paying energy stock with upside potential. The stock’s dividend yield is about 3.4%.
12. Newpark Resources Inc (NYSE:NR)
Average Analyst Price Target: $11.25
Upside Potential: 53.06122449%
Newpark Resources Inc (NYSE:NR) makes value-added drilling fluid systems and composite matting systems used in oilfield and other commercial markets. The stock’s one year price target set by Wall Street analysts is $11.25, while its current price is $7.35.
Liberty Park Capital Management made the following comment about Newpark Resources, Inc. (NYSE:NR) in its Q3 2023 investor letter:
“Newpark Resources, Inc. (NYSE:NR) announced strategic alternatives for its Fluids business at the end of the second quarter. The company’s second-quarter earnings increased nearly 50% year-over-year driven by margin expansion in the company’s Industrial Solutions segment.”
11. Ring Energy Inc (NYSE:REI)
Average Analyst Price Target: $3
Upside Potential: 69.49152542%
Oil and gas company Ring Energy Inc (NYSE:REI) ranks 11th in our list of the best oil stocks to buy according to Wall Street analysts, as they have a $3 price target on the stock over the next 12 months. The stock closed trading at around $1.7 on May 9.
10. Sable Offshore Corp (NYSE:SOC)
Average Analyst Price Target: $20
Upside Potential: 89%
Oil and gas exploration company Sable Offshore Corp (NYSE:SOC) is one of the best oil stocks to buy according to analysts. Analysts have a one-year average price estimate of $20 for the stock, while it was trading at around $10 as of May 8 market close.
Unlike Exxon Mobil Corp (NYSE:XOM) and Chevron Corp (NYSE:CVX), Sable Offshore is a small company in the energy sector with low hedge fund sentiment.
9. Riley Exploration Permian Inc (NYSE:REPX)
Average Analyst Price Target: $50.25
Upside Potential: 92.45499809%
With a dividend yield of over 5%, Riley Exploration Permian Inc (NYSE:REPX) ranks ninth in our list of the best oil stocks to buy according to analysts. Riley Exploration Permian Inc (NYSE:REPX) on May 8 posted Q1 results. Adjusted EPS in the period came in at $1.61, beating estimates by $0.14. Revenue jumped 50.2% year over year to $99.74 million, surpassing estimates by $3.07 million.
8. Profire Energy, Inc. (NASDAQ:PFIE)
Average Analyst Price Target: $3.75
Upside Potential: 96.33507853%
Oilfield technology company Profire Energy, Inc. (NASDAQ:PFIE) is a notable name in the energy industry with significant upside potential. Earlier this month Profire Energy, Inc. (NASDAQ:PFIE) posted Q1 results. GAAP EPS in the quarter came in at $0.03, meeting estimates. Revenue fell 6.8% year over year to $13.6 million, beating estimates by $0.5 million.
In addition to smaller companies like Profire, analysts are also watching Exxon Mobil Corp (NYSE:XOM) and Chevron Corp (NYSE:CVX).
7. Kolibri Global Energy Inc (NASDAQ:KGEI)
Average Analyst Price Target: $6.75
Upside Potential: 106.4220183%
Kolibri Global Energy Inc (NASDAQ:KGEI) is another oil and gas exploration penny stock with upside potential according to Wall Street analysts. They expect the stock price to reach over $6 over the next one year, while its current price is $3.27.
6. Pyxis Tankers Inc (NASDAQ:PXS)
Average Analyst Price Target: $10
Upside Potential: 112.3142251%
Petroleum tankers company Pyxis Tankers Inc (NASDAQ:PXS) ranks sixth in our list of the best oil stocks to buy according to analysts. Yahoo Finance data shows that the stock’s one-year average price target is $10, while its current price as of May 9 is $4.7.
Click to continue reading and see 5 Best Oil Stocks to Buy According to Analysts.
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Disclosure: None. 15 Best Oil Stocks to Buy According to Analysts was initially published on Insider Monkey.