We recently compiled a list of the 12 Hot Oil Stocks to Buy According to Hedge Funds. In this article, we are going to take a look at where Crescent Energy Company (NYSE:CRGY) stands against the other hot oil stocks.
The United States of America is currently producing more oil and gas than any other country in the history of the world, with no signs of a slowdown. The country’s oil production has surged by almost 50% in the last ten years, reaching just over 13.45 million barrels per day in October 2024.
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These numbers could now pump even higher after President Donald Trump has held up the oil industry as a centerpiece of his broader economic mission, with claims that ‘we will drill, baby, drill’. The president has also signed executive orders declaring a national energy emergency and withdrawing from the landmark 2015 Paris climate agreement, the international pact to fight global warming. Trump has also swept aside the freeze on LNG export permits and signed orders to promote oil and gas development in Alaska, though the industry is unlikely to expand there anytime soon.
These aggressive steps have raised concerns of higher US output in a market that is already widely expected to be oversupplied this year. As per the International Energy Agency’s recent market outlook, growth in the global demand for oil is expected to slow down in the coming years as energy transitions advance, putting downward pressure on prices. The US Energy Information Administration stated earlier this month that it expects Brent crude oil prices to fall 8% to average $74 a barrel in 2025, then fall further to $66 a barrel in 2026.
So it still remains to be seen whether the US oil majors will answer the President’s call and shell out the big bucks required to heavily boost their production. Instead, companies appear to have shifted their focus from aggressive growth to keeping their shareholders happy through fat dividends and generous share buybacks. Despite the falling oil prices, more and more fossil fuel companies are returning a bigger chunk of their profits to shareholders, signaling a clear priority shift away from reinvestment in oilfield development. Several oil bigwigs have even resorted to borrowing to make sure they leave their shareholders satisfied, as revealed by Bloomberg that four of the world’s five oil ‘supermajors’ saw fit to borrow $15 billion to fund share buybacks between July and September 2024.
Therefore, according to a recent survey by the Federal Reserve Bank of Dallas, only 14% of oil and gas executives plan to significantly increase capital spending this year, while more of them have plans to cut spending instead of ramping it up. But this doesn’t mean that America’s oil and gas sector doesn’t stand to win with Donald Trump in the Oval Office, especially since it poured more than $75 million in donations to his campaign. The American Petroleum Institute, the most powerful oil lobby in the United States, has outlined a wishlist of 70 policy actions it is seeking from Republicans, including issuing a new 5-year offshore leasing program and repealing environmental standards on vehicle emissions.
Methodology:
To collect data for this article, we used a stock screener to pick oil stocks that have gained over 20% in the last 12 months, as of the close of January 18, 2024. From this group, we picked the 12 companies with the highest number of hedge fund investors, according to Insider Monkey’s database of Q3 2024. The stocks are arranged in ascending order of the number of hedge funds invested in them. Following are the Hottest Oil Stocks to Buy According to Hedge Funds.
At Insider Monkey we are obsessed with the stocks that hedge funds pile into. 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).
View of an oil & gas exploratory platform, surrounded by a vast expanse of sea & sky.
Crescent Energy Company (NYSE:CRGY)
Gain Over Past 12 Months: 53.46%
Number of Hedge Fund Holders: 22
Next on our list of Hot Oil Stocks to Buy Now is Crescent Energy Company (NYSE:CRGY), a differentiated US energy company with operations focused in Texas and the Rockies. The company also operates conventional assets in Wyoming, where it is active in carbon capture, use, and storage.
Crescent Energy Company (NYSE:CRGY) has adopted a proven and consistent strategy of growing profitably through acquisitions and driving operational efficiencies. A great example is how the company acquired its rival SilverBow last summer in a $2.1 billion deal to expand its position in the Eagle Ford, which is close to export facilities along the Gulf Coast. The move has paid off as the integration of the SilverBow business had already yielded approximately $65 million of annualized synergies by the end of Q3 2024. The company’s 2023 acquisitions in the Western Eagle Ford have also continued to drive strong free cash flow and yield approximately $70 million of annualized operational gains relative to the $850 million of combined purchase price.
Crescent Energy Company (NYSE:CRGY) is now further expanding its Eagle Ford portfolio and announced last month that it is acquiring Eagle Ford assets from Ridgemar Energy for upfront consideration of $905 million plus future oil price contingent consideration, subject to customary purchase price adjustments. These assets will contribute meaningful scale, enhance the oil and gas producer’s cash margins, increase its oil-weighting, and extend its low-risk inventory life, all at an attractive and highly accretive valuation.
Crescent Energy Company (NYSE:CRGY) had a solid Q3 2024 and reported record production of 219,000 barrels of oil equivalent per day, with only two months of contribution from SilverBow. The company reported a revenue of approx. $744.9 million during the quarter, up almost 16% YoY but still missing the analysts’ estimates by $33.18 million. Crescent Energy is actively working to drive down costs alongside operating efficiencies, which combined have already lowered well cost by 10% compared to the first half of 2024. During Q3 2024, the company also brought online 27 gross operated wells in the Eagle Ford and 10 gross operated wells in the Uinta, all of which are generating strong initial results.
Crescent Energy Company (NYSE:CRGY) maintains a strong balance sheet with $1.5 billion of liquidity with no near-term debt maturities. The company reported approximately $160 million in levered free cash flow in Q3 2024 and announced a quarterly dividend of $0.12 per share in November 2024, in addition to further repurchases under its active buyback program.
Overall CRGY ranks 10th on our list of the best hot oil stocks to buy according to hedge funds. While we acknowledge the potential for CRGY as an investment, our conviction lies in the belief that some 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 CRGY 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.
