In this piece, we will take a look at the five energy stocks to buy on the OPEC production cuts. For a primer on the production cut, the current state of the industry, and more stocks, head on over to 10 Energy Stocks To Buy On the OPEC Production Cuts.
5. South Jersey Industries, Inc. (NYSE:SJI)
Number of Hedge Fund Holders: 33
South Jersey Industries, Inc. (NYSE:SJI) is an energy company that buys and sells natural gas and provides electricity and natural gas storage and transmission facilities. The firm is headquartered in Folsom, New Jersey, the United States.
South Jersey Industries, Inc. (NYSE:SJI)’s operating revenue grew by 64% during its second fiscal quarter, as its nonutility revenue jumped by more than 100% during the quarter. The main attraction for the firm right now is the fact that it is set to be taken private for a $36 share price by the end of this year. This provides for a nice premium over the current share price of $34.39, and the firm still stands to gain at least $2 per share of termination fees should unforeseen regulatory headwinds cull progress out of the blue.
South Jersey Industries, Inc. (NYSE:SJI) also pays a 31 cent dividend for a 3.6% yield. Insider Monkey’s Q2 2022 survey of 895 hedge funds revealed that 33 had invested in the firm.
South Jersey Industries, Inc. (NYSE:SJI)’s largest investor in our database is Ric Dillon’s Diamond Hill Capital which owns 2.3 million shares that are worth $80 million.
4. Marathon Oil Corporation (NYSE:MRO)
Number of Hedge Fund Holders: 41
Marathon Oil Corporation (NYSE:MRO) is an American exploration and production company that drills and sells crude oil, natural gas, and natural gas liquids. The firm is headquartered in Houston, Texas, and it is one of the oldest companies of its kind after being set up in 1887.
Marathon Oil Corporation (NYSE:MRO) is one of the eleven firms that is extracting oil from the Permian Basin in the Southwest United States. Production from this basin is on track to touch a record 5.45 million barrels by the end of November according to the Energy Information Administration, providing the firm with a larger revenue base. Additionally, and for a crucial point when it comes to investors, Marathon Oil Corporation (NYSE:MRO) is one of the few companies that has tied its capital return program to its operating cash flows instead of its free cash flows. This places investors higher on the priority list when it comes to returning capital, and Marathon Oil Corporation (NYSE:MRO) plans to return $1 billion to investors as long as WTI oil prices stay above $60 a barrel.
Marathon Oil Corporation (NYSE:MRO)’s full year cash flows are slated to touch $4.8 billion, and even if it returns 50%, the annualized return sits at a decent 10.6%. As this year’s June quarter ended, 41 out of the 895 hedge funds polled by Insider Monkey had held a stake in the company.
Out of these, Ken Fisher’s Fisher Asset Management is Marathon Oil Corporation (NYSE:MRO)’s largest investor. It owns 8.6 million shares that are worth $194 million.
3. Devon Energy Corporation (NYSE:DVN)
Number of Hedge Fund Holders: 57
Devon Energy Corporation (NYSE:DVN) explores, develops, and sells oil, natural gas, and natural gas liquids. The firm is headquartered in Oklahoma City, Oklahoma, the United States.
Devon Energy Corporation (NYSE:DVN) is one of the largest oil companies in America, when measuring market capitalization. The firm was worth $49 billion in October 2022. It is also one of the largest in terms of output, as it churned out 616,000 boepd in its second quarter, with roughly half coming through oil. Additionally, the firm massively benefits from even moderately high WTI prices, as its latest breakeven price stands at $60 per barrel. Currently, WTI is priced at $85 per barrel.
The low breakeven price also makes Devon Energy Corporation (NYSE:DVN) a great stock for a recession. The firm’s shares have rallied by 63% year to date and it pays a $1.16 dividend for a 6.27% yield. Insider Monkey’s Q2 2022 study that covered 895 hedge funds outlined that 57 had owned a stake in Devon Energy Corporation (NYSE:DVN).
Rajiv Jain’s GQG Partners is Devon Energy Corporation (NYSE:DVN)’s largest investor. It owns 14.9 million shares that are worth $822 million.
2. Occidental Petroleum Corporation (NYSE:OXY)
Number of Hedge Fund Holders: 66
Occidental Petroleum Corporation (NYSE:OXY) is a diversified exploration company that engages in the production and transport of crude oil, natural gas, natural gas liquids, and oil condensate. The firm is headquartered in Houston, Texas, the United States.
Occidental Petroleum Corporation (NYSE:OXY) is expected to report $9 billion in revenue and $2.69 billion in net income in its upcoming third quarter earnings results, marking massive 33% and 320% annual growths. This will place the firm’s free cash flows at $3.7 billion, marking another 65% increase and an FCF margin of 41%.
As if this weren’t enough, Occidental Petroleum Corporation (NYSE:OXY)’s full year revenue estimates peg growth at 40%, and those for net income promise 339% growth. Therefore, it’s no wonder that the firm’s shares have rallied by 129% year to date. As part of their second quarter of 2022 investments, 66 out of the 895 hedge funds polled by Insider Monkey had held a stake in the firm.
Occidental Petroleum Corporation (NYSE:OXY)’s largest investor is Warren Buffett’s Berkshire Hathaway which owns 158 million shares that are worth $9.3 billion.
1. ConocoPhillips (NYSE:COP)
Number of Hedge Fund Holders: 71
ConocoPhillips (NYSE:COP) produces and transports a host of energy products such as crude oil, natural gas, natural gas liquids, liquefied natural gas (LNG), and bitumen. The firm is headquartered in Houston, Texas, the United States.
ConocoPhillips (NYSE:COP) is making big moves in the LNG industry, with the firm having invested $900 million in Qatar’s $30 billion LNG expansion, and having taken a 30% stake in a new Port Arthur LNG facility, which is slated to produce 5 million tons per year. The firm has also used strong free cash flows of $5.9 billion in the second quarter to pay back $2.9 billion of debt, enabling it to capitalize on the strong market to improve its balance sheet. Its profit more than tripled annually in the second quarter.
ConocoPhillips (NYSE:COP)’s shares have appreciated by 69% year to date and the firm pays a $1.1 dividend for a 3.57% yield. 75 out of the 895 funds surveyed by Insider Monkey during Q2 2022 had bought the company’s shares.
Out of these, Ken Fisher’s Fisher Asset Management is ConocoPhillips (NYSE:COP)’s largest investor. It owns 6.7 million shares that are worth $607 million.
Disclosure: None. You can also take a look at 10 Small-Cap Stocks that Pay Dividends and 10 Best Stocks to Buy According to Billionaire Dan Loeb.
