We recently published a list of 11 Best Crude Oil Stocks To Buy Right Now. In this article, we are going to take a look at where EOG Resources, Inc. (NYSE:EOG) stands against other best crude oil stocks to buy right now.
Crude oil markets have seen extreme volatility over the past year, fueled by a variety of economic, geopolitical, and supply and demand factors. Prices fell at the end of 2023, when international demand faltered and supply remained strong from key regions, before rebounding in early 2024 as leading oil-producing countries implemented supply cuts to stabilize the market. Meanwhile, demand signals have been mixed — industrial activity in major economies has improved, but high interest rates and inflationary pressures have limited overall energy consumption. After the presidential elections in the US, the Trump 2.0 agenda appears to be driving cracks in the economic outlook, due to a plethora of initiatives such as tariffs, a fight with immigration, and significant cuts in government spending. Despite Republicans notoriously being pro-business and pro-carbon, as confirmed by an announced policy of encouraging energy exploration and production on Federal land and Outer Continental Shelf, the reaction of the stock market has been mixed, as many crude oil stocks have underperformed the broad market in the last couple of months.
The reluctance of the broad market to price in an acceleration in the crude oil space is likely due to expectations of lower oil prices, primarily driven by an uncertain economic and industrial outlook. A slowing economy generally consumes less oil, which coupled with an increasing supply should put downward pressure on prices. Optimism for the year ahead vanished and the outlook has become one of the gloomiest since the pandemic. Companies started to signal widespread concerns about the impact of government policies, ranging from spending cuts to tariffs and geopolitical developments. For instance, the US economic surprise index hit the lowest last week since September, while the business capex forecasts were abruptly cut at the beginning of the year. Small businesses reflect similar signals, by cutting their capex expectations (as per surveys), while consumers report deteriorating financial expectations going forward. All these developments don’t play out in favor of a strong economy in the following quarters.
Financial markets have reflected this turbulence, as energy stocks moved in tandem with the swings in oil prices, which retracted more than 10% since the inauguration day. While refiners and midstream companies have generally performed well due to resilient transportation and processing demand, exploration and production firms have faced challenges in securing new investments. Looking forward, macroeconomic and geopolitical factors will continue to shape the crude oil market. Geopolitical factors, particularly in key oil-producing regions, remain an ongoing concern – with the end of the Ukraine conflict becoming a reality, Russian oil will likely flow more freely abroad, putting even more downward pressure on global prices. Despite the aforementioned headwinds, there are also some positive takeaways for investors – while renewable energy investments continue to grow, the transition remains gradual, ensuring that crude oil will remain a critical component of the global energy mix in the future, especially under the carbon-friendly Trump 2.0 regime. Furthermore, with oil prices declining and many crude oil stocks being down from their mid-2024 highs, the current developments may turn out to be a great long-term buying opportunity.
Our Methodology
We used the Insider Monkey proprietary hedge fund holding database and identified the 11 most popular crude oil companies, ranked by the number of hedge funds that own the stock.
Why are we interested in 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 373.4% since May 2014, beating its benchmark by 218 percentage points (see more details here).
An oil rig in action in a vast desert, drilling for natural gas.
EOG Resources, Inc. (NYSE:EOG)
Number of Hedge Fund Holders: 62
EOG Resources, Inc. (NYSE:EOG) is one of the largest independent crude oil and natural gas exploration and production companies in the United States. With a strong presence in major shale plays such as the Permian Basin, Eagle Ford, and Bakken, EOG focuses on high-return, low-cost unconventional resource development. The company is known for its technical expertise in horizontal drilling and hydraulic fracturing, enabling it to maximize production efficiency and resource recovery. While crude oil remains its primary revenue driver, EOG also produces natural gas and natural gas liquids, diversifying its energy output. In addition to its US operations, the company has international assets, including positions in Trinidad and China.
EOG Resources, Inc. (NYSE:EOG) is executing its value proposition based on four key pillars: capital discipline, operational excellence, sustainability, and culture. The company maintains strong capital discipline by focusing on rate of return investments targeting lower double-digit ROCE. Operational excellence is achieved through in-house technical expertise, proprietary technology, and self-sourcing materials. The company is exiting 2024 with momentum and expects consistency in activity levels moving into 2025, though with some shifts across basins. EOG has optimized its balance sheet structure to target less than 1x total debt to EBITDA at $45 WTI, which translates to about $5-6 billion in debt – management clearly took a strategy to protect itself from potentially lower oil prices, which goes in line with our thesis outlined in the introduction.
Looking forward, EOG Resources, Inc. (NYSE:EOG) expects about 20-24 billion cubic feet per day increase in gas demand over the next 5 years (2025-2030), with half coming from LNG feed gas and the remainder from industrial demand, Mexico exports, and AI-related demand. The company is well positioned with its gas assets, particularly the Dorado asset, and has secured strategic takeaway capacity and diverse pricing contracts tied to JKM and Brent. EOG plans to maintain similar activity levels in 2025 as in 2024, with a strategic focus on the thoughtful development of assets like Utica and Dorado rather than rushing into manufacturing mode. The company will continue to lean into share repurchases, believing there is a disconnect between EOG’s intrinsic value and share price.
Overall, EOG ranks 6th on our list of best crude oil stocks to buy right now. While we acknowledge the potential of EOG 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 EOG 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.
