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 Targa Resources Corp. (NYSE:TRGP) 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 tanker at sunset, symbolizing the company’s supply of global crude oil.
Targa Resources Corp. (NYSE:TRGP)
Number of Hedge Fund Holders: 61
Targa Resources Corp. (NYSE:TRGP) is a leading provider of midstream energy services, specializing in the gathering, processing, storage, and transportation of natural gas and natural gas liquids. The company operates an extensive infrastructure network across key US energy basins, including the Permian, Eagle Ford, and Bakken, enabling it to efficiently move hydrocarbons from production sites to end markets. TRGP’s business is primarily focused on natural gas processing, with large-scale assets on the Gulf Coast that facilitate exports and downstream distribution, but it also remains closely tied to crude oil production, as its infrastructure supports producers operating in oil-rich shale plays.
Targa Resources Corp. (NYSE:TRGP) delivered record financial and operational results in 2024, with adjusted EBITDA increasing 17% YoY. The company’s Permian Gathering & Processing (G&P) volumes grew by 14% YoY with an incremental 709 million cubic feet per day moving through their system, significantly exceeding initial high single-digit growth expectations. This outperformance was driven by the advantages of their Permian systems, dedicated acreage on premium rock, lower declines on existing volumes, increased producer activity, higher gas-to-oil ratios, and commercial success in bringing new volumes onto their systems. The company returned significant capital to shareholders in 2024, including a 50% increase in common dividend versus 2023 and a record $755 million of common share repurchases.
Looking ahead to 2025, Targa Resources Corp. (NYSE:TRGP) estimates another year of record results with over $600 million in EBITDA growth expected. The company is positioned to deliver significant growth in 2026 and beyond, with 4 new Permian G&P plants coming online in 2026, driving substantial NGL volume growth through downstream assets. Management expects Permian G&P volume growth to be more second-half weighted in 2025, with several large commercial wins beginning to add volumes late in 2025 and into 2026, positioning the company for even stronger volume growth in 2026. The company’s compelling value proposition continues to be supported by growing EBITDA, meaningful increases to common dividends per share, a reduced share count, and an excellent outlook.
Overall, TRGP ranks 7th on our list of best crude oil stocks to buy right now. While we acknowledge the potential of TRGP 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 TRGP 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.
