Goldman Sachs Energy Stocks: Top 5 Stock Picks

In this article, we discuss the top 5 energy stock picks of Goldman Sachs. If you want to see more stocks in this selection, check out Goldman Sachs Energy Stocks: Top 10 Stock Picks. 

5. Energy Transfer LP (NYSE:ET)

Number of Hedge Fund Holders: 36

Goldman Sachs’ Stake Value: $927,898,000

Energy Transfer LP (NYSE:ET) is headquartered in Dallas, Texas, and the company provides energy-related services, including natural gas pipelines and natural gas storage facilities. Energy Transfer LP (NYSE:ET) is one of the premier Goldman Sachs energy stocks. The firm owns approximately 93 million shares of Energy Transfer LP (NYSE:ET) worth $928 million as of Q2 2022, representing 0.20% of the total holdings. 

On October 25, Energy Transfer LP (NYSE:ET) declared a $0.265 per share quarterly dividend, a 15.2% increase from its prior dividend of $0.230. The dividend is payable on November 21, to shareholders of record on November 4. Energy Transfer LP (NYSE:ET)’s dividend yield on November 8 came in at 8.61%. 

Morgan Stanley analyst Robert Kad on October 19 raised the price target on Energy Transfer LP (NYSE:ET) to $17 from $15 and kept an Overweight rating on the shares. Midstream earnings season is set to begin and he expects fewer material earnings beats than in Q2, but “nonetheless largely in-line results,” the analyst told investors. 

According to Insider Monkey’s data, 36 hedge funds were bullish on Energy Transfer LP (NYSE:ET) at the end of June 2022, compared to 31 funds in the last quarter. David Abrams’ Abrams Capital Management is the biggest stakeholder of the company, with more than 22 million shares worth $220.8 million. 

Miller Value Partners, an investment firm, talked about Energy Transfer L.P. (NYSE:ET) in its Q2 2021 investor letter. Here is what the fund said:

“Energy Transfer LP (ET) rose over the period along with the price of oil climbing 40.59% over the period. The company received positive news that the Dakota Access Pipeline project would not be shut down while the Environmental Impact Statement by the US Army Corps of Engineers is drawn up. Energy Transfer reported strong 1Q results with revenue of $17B surpassing expectations for $11.8B with adjusted earnings before income, taxes, depreciation and amortization (EBITDA) hitting $5.04B ahead of consensus of $2.77B. The company raised full year adjusted EBITDA guidance to $12.9-13.3B from $10.6-11.0B previously, with the increase largely related to the benefits realized from Winter Storm Uri. The company paid down $3.7B in debt during the quarter, using strong cash flow to reduce leverage. The company also announced the issuance of $900M in 6.5% Series H perpetual preferreds with the company using the proceeds to repay debt and for general purposes.”

4. Exxon Mobil Corporation (NYSE:XOM)

Number of Hedge Fund Holders: 72

Goldman Sachs’ Stake Value: $1,157,039,000

Exxon Mobil Corporation (NYSE:XOM) is one of the most prominent Goldman Sachs energy stocks to monitor. Goldman Sachs owned 13.5 million shares of Exxon Mobil Corporation (NYSE:XOM) in the second quarter of 2022, worth $1.16 billion and representing 0.26% of the total portfolio. On October 28, Exxon Mobil Corporation (NYSE:XOM) declared a $0.91 per share quarterly dividend, a 3.4% increase from its prior dividend of $0.88. The dividend is payable on December 9. 

On October 31, Truist analyst Neal Dingmann raised the price target on Exxon Mobil Corporation (NYSE:XOM) to $114 from $111 and maintained a Hold rating on the shares. The company’s Q3 results included U.S. refining throughput levels not seen since 2008, as its Energy Products division reported 13% growth, the analyst told investors. He further observed that Exxon Mobil Corporation (NYSE:XOM) continues to “print money”, generating more than $17 billion in free cash flow last quarter, which is “notable” given the lower oil prices and the flat total production.

According to Insider Monkey’s Q2 data, 72 hedge funds were long Exxon Mobil Corporation (NYSE:XOM), compared to 83 funds in the prior quarter. Rajiv Jain’s GQG Partners is the leading position holder in the company, with 47.5 million shares worth over $4 billion. 

In its Q2 2022 investor letter, First Eagle Investments, an asset management firm, highlighted a few stocks and Exxon Mobil Corporation (NYSE:XOM) was one of them. Here is what the fund said:

“Integrated oil and gas giant Exxon Mobil Corporation (NYSE:XOM) performed well in the second quarter as continued high prices for energy products supported the stock. As the largest refiner in the US, the company has benefitted from wide “crack spreads,” or the margin between the cost of crude oil and the petroleum products extracted from it. Exxon continues to invest in refining capacity in the US, which industry wide has been in steady decline since 2019. We are pleased that Exxon has been using its strong cash flows to reduce debt and to return cash to shareholders through dividends and stock repurchases.”

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

Number of Hedge Fund Holders: 53

Goldman Sachs’ Stake Value: $1,733,754,000

Enphase Energy, Inc. (NASDAQ:ENPH) is a California-based company that designs, develops, manufactures, and sells home energy solutions for the solar photovoltaic industry in the United States and internationally. Enphase Energy, Inc. (NASDAQ:ENPH) is one of the most notable Goldman Sachs energy stocks. The firm owned 17.5 million shares of Enphase Energy, Inc. (NASDAQ:ENPH) in Q2 2022, worth $1.7 billion and representing 0.39% of the total portfolio. 

On October 25, Enphase Energy, Inc. (NASDAQ:ENPH) reported a Q3 non-GAAP EPS of $1.25 and a revenue of $634.71 million, outperforming Wall Street estimates by $0.16 and $18.85 million, respectively. Revenue for the period climbed 80.6% on a year-over-year basis. 

Susquehanna analyst Biju Perincheril on October 26 raised the price target on Enphase Energy, Inc. (NASDAQ:ENPH) to $310 from $290 and kept a Positive rating on the shares. The analyst said they outperformed topline and bottom line estimates on resilient demand and margins for microinverters as iQ8 continues to indicate a larger proportion of sales. He noted that Q4 2022 revenue guidance demonstrates 10% growth, which topped his estimate.

Among the hedge funds tracked by Insider Monkey, 53 funds reported owning stakes in Enphase Energy, Inc. (NASDAQ:ENPH) at the end of June 2022, compared to 57 funds in the preceding quarter. Philippe Laffont’s Coatue Management is the largest position holder in the company, with 1.36 million shares worth $266.8 million. 

Carillon Tower Advisers made the following comment about Enphase Energy, Inc. (NASDAQ:ENPH) in its Q3 2022 investor letter:

“Enphase Energy, Inc. (NASDAQ:ENPH) provides technology to manage solar generation, storage, and communication on one platform. The company reported an impressive quarter that exceeded investor expectations on all meaningful metrics, which sent shares higher. The stock remains a useful way to gain exposure to the secular theme of alternative energy and could benefit from the recently passed Inflation Reduction Act.”

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

Number of Hedge Fund Holders: 40

Goldman Sachs’ Stake Value: $1,986,906,000

SolarEdge Technologies, Inc. (NASDAQ:SEDG) is an Israel-based company that designs, develops, and sells direct current optimized inverter systems for solar photovoltaic installations worldwide. It operates through five segments – Solar, Energy Storage, e-Mobility, Critical Power, and Automation Machines. SolarEdge Technologies, Inc. (NASDAQ:SEDG) is one of the top Goldman Sachs energy stocks. The firm owned 16.5 million shares worth nearly $2 billion in SolarEdge Technologies, Inc. (NASDAQ:SEDG), representing 0.44% of the total securities. 

On November 8, BMO Capital analyst Ameet Thakkar raised the price target on SolarEdge Technologies, Inc. (NASDAQ:SEDG) to $316 from $306 and reiterated an Outperform rating on the shares. The company’s Q3 results and guidance made him more confident that margins potentially bottomed out during Q2, the analyst wrote in a research note.

According to Insider Monkey’s data, 40 hedge funds were bullish on SolarEdge Technologies, Inc. (NASDAQ:SEDG) at the end of June 2022, compared to 47 funds in the last quarter. Ian Simm’s Impax Asset Management is the leading position holder in the company, with 580,909 shares worth $158.20 million. 

Here is what ClearBridge International Growth EAFE Portfolio has to say about SolarEdge Technologies, Inc. (NASDAQ:SEDG) in its Q2 2022 investor letter:

“We are well-positioned to participate in the accelerating energy transition. High and rising utility costs combined with policy support are driving increased penetration of home solar plus storage systems in Europe. Israel-based SolarEdge Technologies (NASDAQ:SEDG) expects to see significant growth in solar installations in this market led by Germany and Italy, among others, where consumers are not only demanding solar on the roof but a complete system solution including batteries. This phenomenon is accelerating revenue growth for these companies.”

1. NRG Energy, Inc. (NYSE:NRG)

Number of Hedge Fund Holders: 29

Goldman Sachs’ Stake Value: $3,035,643,000

NRG Energy, Inc. (NYSE:NRG) operates as an integrated power company in the United States. NRG Energy, Inc. (NYSE:NRG) was founded in 1989 and is headquartered in Houston, Texas. NRG Energy, Inc. (NYSE:NRG) is the biggest energy holding in the Goldman Sachs portfolio. The firm owns 28.2 million shares worth over $3 billion in NRG Energy, Inc. (NYSE:NRG) as of Q2 2022. 

On October 21, NRG Energy, Inc. (NYSE:NRG) declared a quarterly dividend of $0.35 per share, in line with previous. The dividend is distributable on November 15, to shareholders of record on November 1. NRG Energy, Inc. (NYSE:NRG)’s dividend yield on November 8 came in at 3.14%. 

According to Insider Monkey’s data, 29 hedge funds held stakes worth $1.3 billion in NRG Energy, Inc. (NYSE:NRG) at the end of June 2022, compared to 31 funds in the prior quarter worth $1.5 billion. Richard S. Pzena’s Pzena Investment Management is the leading stakeholder of the company, with 16.5 million shares valued at nearly $631 million.

You can also take a look at 14 Largest Lithium Producers in the World and Biggest IT Companies in the World. 

Follow Insider Monkey on Twitter