We recently compiled a list of the 10 Worst Performing Energy Stocks in 2024. In this article, we are going to take a look at where Cosan S.A. (NYSE:CSAN) stands against other worst performing energy stocks in 2024.
U.S. Crude oil prices fell 2.56% on Tuesday, January 21, with U.S. crude closing at $76.89 per barrel. Global benchmark Brent crude also declined, settling at $79.29 per barrel, a decrease of 86 cents or 1.07%. The drop in oil prices came as President Donald Trump, following his inauguration on Monday, announced that his administration was considering imposing 25% tariffs on Canada and Mexico. These tariffs could potentially slow economic growth and, in turn, impact fuel demand.
In addition to the tariff considerations, President Trump signed a series of executive actions aimed at boosting domestic energy production. He declared a national energy emergency, sought to roll back restrictions on offshore drilling that were implemented during the Biden administration, and lifted the pause on new liquified natural gas (LNG) exports. These moves are expected to stimulate the U.S. energy sector by increasing domestic production and easing regulatory constraints.
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In an interview with Yahoo Finance on January 22, Andy Lipow, President at Lipow Oil Associates, discussed the implications of President Trump’s declaration of a national energy emergency and his push for increased oil and gas production in the United States.
Andy Lipow noted that while the Trump Administration’s policy of “drill baby drill” aims to boost domestic oil production, it does not necessarily translate into immediate or significant increases in exploration and production. The decision to invest in new drilling operations, especially in high-cost areas such as the offshore Gulf of Mexico and Alaska, depends on the financial viability and the current price of crude oil. Despite the easing of regulations and the availability of more acreage, oil companies will weigh the potential financial rewards of investing large sums of money to increase production.
Lipow acknowledged that the United States is already at peak oil production, outpacing both Russia and Saudi Arabia. This trend has developed over the past decade, and while the U.S. is expected to set another production record in 2025, the impact on global oil prices is not straightforward. The market is more influenced by the Administration’s policies overseas, such as sanctions on Russian oil exports and Iranian oil production. According to Lipow. the imposition of 25% tariffs on oil imports from Canada and Mexico could divert these supplies elsewhere, potentially raising the cost of gasoline and diesel for U.S. consumers. This is contrary to the Trump Administration’s goal of lowering energy costs. Lipow expressed that the combination of these factors, including sanctions on Russia, Iran, and Venezuela, coupled with slow global oil demand growth, is likely to result in higher prices throughout the year.
Lipow believes that the rollback of executive orders, such as lifting the freeze on new liquefied natural gas (LNG) permits, is seen as positive for U.S. energy production. The recent opening of new LNG export facilities in Louisiana and Corpus Christi, along with several more facilities coming online in the next couple of years, is expected to boost U.S. energy exports.
The Trump administration’s focus on supporting domestic energy production through regulatory rollbacks, increased access to resources, and incentives for new projects is expected to provide much-needed relief for companies currently facing challenges.
A petrol tanker truck refueling a highway service station, highlighting the fuel distribution arm of the company.
Our Methodology
To compile our list of the 10 worst performing energy stocks in 2024, we used the Finviz and Yahoo stock screeners to find stocks that have experienced the most significant decline over the last year and have a market cap of more than $1 billion as of January 21. We then narrowed our choices to 10 stocks with the worst performance. We also included their market cap and hedge fund sentiment, which was taken from Insider Monkey’s Hedge Fund database of 900 elite hedge funds as of Q3 of 2024. The list is sorted in descending order of their performance as of January 21.
Why do we care about what hedge funds do? The reason is simple: our research has shown that we can outperform the market by imitating the top stock picks of the best hedge funds. Our quarterly newsletter’s strategy selects 14 small-cap and large-cap stocks every quarter and has returned 275% since May 2014, beating its benchmark by 150 percentage points (see more details here).
Cosan S.A. (NYSE:CSAN)
1-Year Performance as of January 21: -64.87%
Market Cap as of January 21: $2.39 Billion
Number of Hedge Fund Investors: 11
Cosan S.A. (NYSE:CSAN) is a Brazilian holding company with operations in energy, agriculture, and logistics. Cosan S.A. (NYSE:CSAN) operates its energy business through Raízen, a joint venture with Shell that specializes in producing and distributing ethanol, sugar, and other bioenergy products. Additionally, the company manages its natural gas distribution business under Compass.
Cosan S.A. (NYSE:CSAN) is prioritizing advancements in production yields and efficiency by investing in cutting-edge agricultural techniques and biotechnology. These efforts aim to enhance the company’s ethanol production efficiency. Additionally, the company is pursuing new markets and applications for its ethanol, particularly in the industrial and chemical sectors, where it serves as a versatile raw material in various processes. By expanding its customer base and diversifying applications, Cosan S.A. (NYSE:CSAN) aims to minimize reliance on the automotive fuel market and establish alternative revenue streams.
Cosan S.A. (NYSE:CSAN) is also leveraging digital technologies to optimize supply chain management and enhance operational efficiency, ensuring it remains at the forefront of industry trends. The company is investigating the potential of IoT (Internet of Things) and AI (Artificial Intelligence) to monitor and optimize processes throughout the production chain, from sugarcane cultivation to ethanol refining and distribution.
Furthermore, Cosan S.A.’s (NYSE:CSAN) management team has identified several key priorities to drive growth and improve profitability in the future. One of the main focus areas is portfolio management, where the company is actively exploring opportunities to optimize its portfolio and create value for shareholders. This includes evaluating options for its subsidiaries, such as Moove and Compass, and considering alternatives such as initial public offerings (IPOs) or private placements. Additionally, Cosan S.A. (NYSE:CSAN) has been actively managing its debt profile to reduce costs and improve its financial flexibility.
Overall CSAN ranks 1st on our list of the worst performing energy stocks in 2024. While we acknowledge the potential of CSAN as an investment, our conviction lies in the belief that AI stocks hold greater promise for delivering higher returns and doing so within a shorter time frame. If you are looking for an AI stock that is more promising than CSAN but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
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Disclosure: None. This article is originally published at Insider Monkey.
