In this article, we discuss 5 best energy stocks for inflation. If you want to see more stocks in this selection, click 10 Best Energy Stocks for Inflation.
5. Enphase Energy, Inc. (NASDAQ:ENPH)
Number of Hedge Fund Holders: 57
Enphase Energy, Inc. (NASDAQ:ENPH) was incorporated in 2006 and is headquartered in Fremont, California. The company specializes in home energy solutions for the solar photovoltaic industry in the United States and internationally. On July 14, after the Biden administration announced it would allocate $56 million to programs for elevating U.S. manufacturing of solar energy products, Enphase Energy, Inc. (NASDAQ:ENPH) stock gained 2.2%.
On July 20, JPMorgan analyst Mark Strouse raised the price target on Enphase Energy, Inc. (NASDAQ:ENPH) to $247 from $240 and reiterated an Overweight rating on the shares. The analyst is “generally positive” on the alternative energy sector in the second half of 2022, noting secular trends will thrive regardless of the economic cycle. Soaring fossil fuel prices and increasing efforts for energy security are building higher demand for renewables, despite supply chain constraints and elevated input costs, the analyst told investors in a research note.
According to Insider Monkey’s data, Enphase Energy, Inc. (NASDAQ:ENPH) was part of 57 hedge fund portfolios at the end of Q1 2022, up from 50 funds in the prior quarter. Bruce Emery’s Greenvale Capital is a prominent shareholder of the company, with 500,000 shares worth about $101 million.
Here is what ClearBridge Investments Sustainability Leaders Strategy has to say about Enphase Energy, Inc. (NASDAQ:ENPH) in its Q1 2022 investor letter:
“Enphase Energy (NASDAQ:ENPH) is a key solar holding that should be able to take advantage of greater incentives for solar installations in many geographies. The company was also a strong contributor for the quarter, overcoming pressures of a higher discount rate on their strong projected future earnings, raw material inflation and supply chain challenges as their long-term value was reaffirmed.”
4. Schlumberger Limited (NYSE:SLB)
Number of Hedge Fund Holders: 58
Schlumberger Limited (NYSE:SLB) is a Texas-based company that provides technology for the energy industry worldwide. The company operates through four segments – Digital & Integration, Reservoir Performance, Well Construction, and Production Systems. On July 22, Schlumberger Limited (NYSE:SLB) raised its full-year revenue guidance after a solid Q2 in which “growth was very broad across all dimensions”. The company expects $27 billion in revenue this year after soaring 20% in Q2 on the back of higher drilling and completion activity in its North America and International segments. The company also declared a $0.175 per share quarterly dividend, which is distributable on October 13 to shareholders of record on September 7.
On July 25, Cowen analyst Marc Bianchi raised the price target on Schlumberger Limited (NYSE:SLB) to $49 from $47 and kept an Outperform rating on the shares. The analyst observed that guidance may be conservative but he still sees a multi-year up-cycle and his updated price target delivers 40% upside.
According to Insider Monkey’s data, 58 hedge funds were long Schlumberger Limited (NYSE:SLB) at the end of March, up from 47 funds in the earlier quarter. Rajiv Jain’s GQG Partners featured as the leading shareholder of the company, with roughly 28 million shares worth $1.15 billion.
Here is what ClearBridge Investments has to say about Schlumberger Limited (NYSE:SLB) in its Q2 2021 investor letter:
“Schlumberger is a leading oilfield services company that should enjoy both cyclical and secular opportunities over the next market cycle and beyond. On the cyclical front, after years of declining energy service activity and negative pricing, service activity is increasing modestly and pricing is inflecting higher, which is always the key cyclical driver for energy services stocks. In addition, we expect the Middle East to gain share of oil production as ESG considerations limit upstream investment in other regions. As the dominant service provider in the Middle East, Schlumberger is very well-positioned for this shift. On the secular front, Schlumberger has a rapidly growing digital services capability that helps producers operate much more efficiently and with much less waste, which will be a core ESG focus. Finally, Schlumberger is investing directly, and with partners, in energy transition capabilities such as carbon capture, hydrogen and geothermal that should allow Schlumberger to grow and remain viable well beyond the current energy cycle.”
3. Devon Energy Corporation (NYSE:DVN)
Number of Hedge Fund Holders: 66
Devon Energy Corporation (NYSE:DVN) is an Oklahoma-based energy firm that engages in the exploration and production of oil, natural gas, and natural gas liquids in the United States. On July 22, Piper Sandler analyst Mark Lear maintained an Overweight rating on Devon Energy Corporation (NYSE:DVN) and lowered the price target on the shares to $94 from $97. The analyst said that while the last six weeks have been volatile in energy with recession threats and cost inflation challenging the group, the setup is “broadly favorable” for the energy group heading into Q2 earnings. Similarly, Truist analyst Neal Dingmann on July 19 raised the price target on the stock to $115 from $103 and kept a Buy rating on the shares as part of a broader note previewing Q2 results in the exploration and production space.
According to Insider Monkey’s Q1 data, 66 hedge funds were bullish on Devon Energy Corporation (NYSE:DVN), up from 51 funds in the earlier quarter. Ken Fisher’s Fisher Asset Management is a prominent stakeholder of the company, with 4.2 million shares worth $249.3 million.
2. Occidental Petroleum Corporation (NYSE:OXY)
Number of Hedge Fund Holders: 67
Occidental Petroleum Corporation (NYSE:OXY) is an American company that explores and develops oil and gas properties in the United States, the Middle East, Africa, and Latin America. The stock has gained over 107% year to date as of July 25. On July 18, Warren Buffett’s Berkshire Hathaway added almost 2 million Occidental Petroleum Corporation (NYSE:OXY) shares to its portfolio, which lifted its existing position closer to a 20% stake in the company. The billionaire investor is attracted to the company’s renewable energy ambitions, strong free cash flow, and notable capital decisions by the CEO, Vicki Hollub.
Truist analyst Neal Dingmann on July 19 raised the price target on Occidental Petroleum Corporation (NYSE:OXY) to $105 from $93 and kept a Buy rating on the shares as part of a broader research note previewing Q2 results in the E&P space. According to Insider Monkey’s data, 67 hedge funds were bullish on Occidental Petroleum Corporation (NYSE:OXY) at the end of Q1 2022, up from 58 funds in the earlier quarter.
Here is what Smead Capital Management has to say about Occidental Petroleum Corporation (NYSE:OXY) in its Q3 2021 investor letter:
“Oil stocks dominated our winners for the quarter. We showed that we have unlimited ability to tempt fate by buying into Occidental Petroleum (OXY) this year after it was our biggest loser of 2020. It gained 16.64% during the third quarter.”
1. ConocoPhillips (NYSE:COP)
Number of Hedge Fund Holders: 67
ConocoPhillips (NYSE:COP) was founded in 1917 and is headquartered in Houston, Texas. The company produces, transports, and distributes crude oil, bitumen, natural gas, liquefied natural gas, and natural gas liquids worldwide. ConocoPhillips (NYSE:COP) is focused on raising its exposure to the global LNG market. The company is also generating exponential FCF and has a dividend yield exceeding 3%, with a price to earnings ratio of just 9.47.
MKM Partners analyst Leo Mariani initiated coverage of ConocoPhillips (NYSE:COP) on July 20 with a Buy rating and a $110 price target as part of a broader research note on Exploration & Production names. Despite the recent volatility in the oil market, WTI oil prices should remain over $100 as long as the Ukraine war continues, the analyst told investors. The analyst is also optimistic about ConocoPhillips (NYSE:COP)’s “high returns of capital to shareholders, lower base production declines compared to peers, valuable international asset diversification and strong balance sheet”.
According to Insider Monkey’s data, 67 hedge funds were bullish on ConocoPhillips (NYSE:COP) at the end of Q1 2022, up from 56 funds in the earlier quarter. Ric Dillon’s Diamond Hill Capital is the leading shareholder of the company, with more than 7 million shares worth $702.5 million.
Here is what ClearBridge Investments Large Cap Value Strategy has to say about ConocoPhillips (NYSE:COP) in its Q1 2022 investor letter:
“The energy sector, which led a strong market in 2021, generated even more dramatic relative performance in the quarter, advancing 39% and leading the benchmark Russell 1000 Value Index. Years of restrained investment in the energy sector, combined with a strong post-pandemic recovery, contributed to the higher commodity prices. The upward pressure escalated with the Russian invasion of Ukraine. Our energy holdings ConocoPhillips (NYSE:COP) benefited from higher commodity prices and was among the top contributors to first-quarter performance.”
You can also take a look at This Analyst Is Bearish on These 15 Retail Stocks Amid “Soft Landing” Expectations and 10 Best Stocks For Inflation According to Redditors.
