In this article, we discuss the 11 safe energy stocks for a retirement stock portfolio.
The energy sector has been one of the best performers in the S&P 500 over the past few decades despite the volatility seen in energy prices in recent years. In the last few months, the energy sector, amid a slowing macro environment, has outperformed the broader market as investors shift away from riskier sectors like tech towards safer havens in energy. Some of the top energy stocks in this context include Exxon Mobil Corporation (NYSE:XOM), ConocoPhillips (NYSE:COP), and Chevron Corporation (NYSE:CVX).
The energy industry is expected to continue on a growth path in the coming years as innovations within the sector, with the rise of renewables and alternative sources, as well as government spending stimulate business. This makes the industry a top investment pick for a retirement stock portfolio. Per estimates by S&P Global, US spending on upgrading and modernizing energy and water infrastructure will reach $63 billion in 2022. Investors who are eager to capitalize on these growth trends should invest in energy stocks for maximum reward.
Our Methodology
The companies that operate in the energy sector and have established business models that have demonstrated historical resilience against inflationary headwinds were selected for the list. Many of these stocks are solid dividend payers, which make them ideal for a retirement portfolio.
Retirement Stock Portfolio: Safe Energy Stocks to Consider
11. Brookfield Renewable Partners L.P. (NYSE:BEP)
Number of Hedge Fund Holders: 19
Brookfield Renewable Partners L.P. (NYSE:BEP) owns a portfolio of renewable power generating facilities primarily in North America, Colombia, Brazil, Europe, India, and China. It is one of the best safe energy stocks for a retirement stock portfolio. On October 11, Brookfield Business Partners, with its institutional partners, agreed to sell Westinghouse Electric Co, which is its nuclear technology services operation, to an investor group led by Cameco and Brookfield Renewable Partners for $8 billion.
On October 18, TD Securities analyst Sean Steuart resumed coverage of Brookfield Renewable Partners L.P. stock with a Buy rating and $41 price target, highlighting that the partnership with Cameco to acquire Westinghouse Electric expands the firm more aggressively into broader energy transition segments.
At the end of the third quarter of 2022, 19 hedge funds in the database of Insider Monkey held stakes worth $161 million in Brookfield Renewable Partners L.P., compared to 19 in the preceding quarter worth $236 million.
Just like Exxon Mobil Corporation, ConocoPhillips, and Chevron Corporation, Brookfield Renewable Partners L.P. is one of the best safe energy stocks for a retirement stock portfolio.
In its Q1 2022 investor letter, ClearBridge Investments, an asset management firm, highlighted a few stocks and Brookfield Renewable Partners L.P. was one of them. Here is what the fund said:
“Brookfield Renewable Partners L.P. is a pure-play renewables operator and developer headquartered in Canada, focused on international hydro, solar, wind and storage technology. As more private and public institutions announce ambitious carbon reduction initiatives, Brookfield Renewable’s globally diversified, multi-technology renewables business makes it an attractive partner. Brookfield’s development pipeline stands at 18,000 MWs, providing confidence that the company can meet its targeted double-digit cash flow growth through 2025. The market narrative around the energy transition and energy security, along with increasing fossil fuels prices which have driven greater focus on switching to renewables, helped Brookfield shares in the quarter.”
10. Plug Power Inc. (NASDAQ:PLUG)
Number of Hedge Fund Holders: 32
Plug Power Inc. delivers end-to-end clean hydrogen and zero-emissions fuel cell solutions for various sectors. It is one of the top safe energy stocks for a retirement stock portfolio. On September 8, Plug Power said that it has secured its largest multi-site electrolyzer order in Europe. Lhyfe, a hydrogen production company, listed at Euronext in Paris, placed an order for ten 5MW PEM electrolyzer systems for production of green hydrogen across multiple plants in Europe.
On October 21, Canaccord analyst George Gianarikas assumed coverage of Plug Power Inc. stock with a Hold rating with a price target of $16, down from $21, noting that the company was ramping up green hydrogen production, which offers both high margins and high growth over time.
At the end of the third quarter of 2022, 32 hedge funds in the database of Insider Monkey held stakes worth $373.5 million in Plug Power Inc., compared to 26 in the preceding quarter worth $258.9 million.
9. SolarEdge Technologies, Inc. (NASDAQ:SEDG)
Number of Hedge Fund Holders: 44
SolarEdge Technologies, Inc. (NASDAQ:SEDG) designs, develops and sells direct current (DC) optimized inverter systems for solar photovoltaic (PV) installations worldwide. It is one of the premier safe energy stocks for a retirement stock portfolio. On October 28, SolarEdge announced the Australian launch of a DC optimized smart energy ecosystem that promises to get the most from solar and battery systems, both on energy cost savings and energy security.
On October 25, B. Riley analyst Christopher Souther maintained a Buy rating on SolarEdge Technologies, Inc. stock and lowered the price target to $377 from $385, noting the reduced gross margin estimates for fourth quarter and early 2023 reflect expectations caused by the impact from currency headwinds that will take another two quarters or so to play out.
At the end of the third quarter of 2022, 44 hedge funds in the database of Insider Monkey held stakes worth $673.8 million in SolarEdge Technologies, Inc., compared to 40 in the previous quarter worth $749.4 million.
In its Q2 2022 investor letter, ClearBridge Investments, an asset management firm, highlighted a few stocks and SolarEdge Technologies, Inc. was one of them. Here is what the fund said:
“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 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.”
8. First Solar, Inc. (NASDAQ:FSLR)
Number of Hedge Fund Holders: 45
First Solar, Inc. (NASDAQ:FSLR) provides global photovoltaic (PV) solar energy solutions. It is one of the prominent safe energy stocks for a retirement stock portfolio. On October 26, First Solar said that it has signed a supply agreement with Swift Current, a city of Canada, for thin film solar modules. First Solar will supply Swift Current with 2GW high performance and responsibly produced thin film solar modules in 2025 and 2026.
On November 7, KeyBanc analyst Sophie Karp maintained an Overweight rating on First Solar, Inc. stock and raised the price target to $175 from $145, noting that the updated estimates fully reflect the impact of AMC on the company’s earnings in 2023.
Among the hedge funds being tracked by Insider Monkey, Chicago-based investment firm Citadel Investment Group is a leading shareholder in First Solar, Inc. with 3.2 million shares worth more than $426 million.
7. Devon Energy Corporation (NYSE:DVN)
Number of Hedge Fund Holders: 51
Devon Energy Corporation (NYSE:DVN) is an independent energy company that primarily engages in the exploration, development, and production of oil, natural gas, and natural gas liquids. It is one of the elite safe energy stocks for a retirement stock portfolio. On November 1, Devon Energy posted earnings for the third quarter of 2022, reporting earnings per share of $2.18, beating market estimates by $0.05. The revenue over the period was $5.43 billion, up 56.5% compared to the revenue over the same period last year and beating market estimates by $640 million.
On October 18, Piper Sandler analyst Mark Lear raised the target on Devon Energy Corporation stock to $96 from $94 and kept an Overweight rating, noting that exploration and productions were back on solid footing heading into the third quarter results after a volatile September due to OPEC and supply cut issues.
At the end of the third quarter of 2022, 51 hedge funds in the database of Insider Monkey held stakes worth $1.5 billion in Devon Energy Corporation, compared to 57 in the previous quarter worth $1.5 billion.
In its Q2 2022 investor letter, GoodHeaven Capital Management, an asset management firm, highlighted a few stocks and Devon Energy Corporation was one of them. Here is what the fund said:
“Our biggest dollar gainer within this period was Devon Energy Corporation, a position which emanated from a takeover in early 2021 of our long-time holding WPX Energy. We are sitting on a material (unrealized) gain from our cost and are now receiving material dividends thanks to Devon’s thoughtful fixed/variable dividend policy. Energy is now a hot sector for investors but we have had material exposure for a long time. We remember a bit too well $40 oil, NEGATIVELY PRICED front-month oil contract, and what it’s like to own a company with leverage and negative free cash flow during such periods. Our desire to have our biggest portfolio exposures be high-return, growing, reasonably predictable and moderately levered companies lead us to reduce our Devon exposure in the past. When the recent facts and circumstances for the industry changed and appeared supportive of healthy oil prices, we decided to maintain a sizable holding and more recently added to the position. At Devon’s Q1 dividend rate, which is most variable in nature, the shares now yield approximately 10% and our yield on our average cost is materially higher. In addition, we maintain additional energy exposure through our long-term (and successful) holding in Hess Midstream and less directly through TerraVest and Berkshire Hathaway’s energy investments.”
6. EOG Resources, Inc. (NYSE:EOG)
Number of Hedge Fund Holders: 52
EOG Resources, Inc. (NYSE:EOG) explores, develops, produces, and markets crude oil, natural gas and natural gas liquids. It is one of the major safe energy stocks for a retirement stock portfolio. On November 3, EOG Resources posted earnings for the third quarter of 2022, reporting earnings per share of $3.71, $0.50 less than the estimates of $4.21. The revenue over the period was $7.59 billion, compared to the consensus estimates of $6.62 billion.
On November 7, Susquehanna analyst Biju Perincheril maintained a Positive rating on EOG Resources, Inc. stock and raised the price target to $172 from $162, noting that the company reported solid third quarter results, beating both EPS and production expectations.
Among the hedge funds being tracked by Insider Monkey, Chicago-based investment firm Harris Associates is a leading shareholder in EOG Resources, Inc. with 7.1 million shares worth more than $787.4 million.
Alongside Exxon Mobil Corporation, ConocoPhillips, and Chevron Corporation, EOG Resources, Inc. is one of the best safe energy stocks for a retirement stock portfolio.
In its Q1 2022 investor letter, Oakmark Funds, an asset management firm, highlighted a few stocks and EOG Resources, Inc. was one of them. Here is what the fund said:
“EOG Resources (+36%), was among our top contributors in the quarter as oil prices rallied due to tight supplies, which were then exacerbated by the Russian invasion of Ukraine. Although their share prices have increased considerably, both companies still look quite undervalued even using longer-term oil prices in the $65-70 dollar range. Meanwhile, if times are good over the next couple of years, we expect these companies to return significant percentages of their market caps to shareholders.”
5. Diamondback Energy, Inc. (NASDAQ:FANG)
Number of Hedge Fund Holders: 55
Diamondback Energy, Inc. (NASDAQ:FANG) is an independent oil and natural gas company that focuses on the acquisition, development, exploration, and exploitation of unconventional and onshore oil and natural gas reserves in the Permian Basin in West Texas. It is one of the best safe energy stocks for a retirement stock portfolio. On October 11, Diamondback said that it agreed to acquire all leasehold interest and related assets of closely held FireBird Energy for 5.86 million common shares and $775 million in cash. The deal adds 75 gross, highly contiguous acres in the Midland Basin.
On November 1, Roth Capital analyst John White maintained a Buy rating on Diamondback Energy, Inc. stock and raised the price target to $182 from $150, noting that the company’s guidance prompted an increase to the third quarter 2022 production estimate.
At the end of the third quarter of 2022, 55 hedge funds in the database of Insider Monkey held stakes worth $910.9 million in Diamondback Energy, Inc., compared to 54 in the previous quarter worth $811.4 million.
In its Q1 2021 investor letter, Miller Value Partners, an asset management firm, highlighted a few stocks and Diamondback Energy, Inc. was one of them. Here is what the fund said:
“Diamondback Energy (FANG) returned 14.4% in the quarter as the oil price rose and fell during the quarter ending the period largely in the same place that it started. The company reported strong 3Q results beating on the top and bottom lines. The company reported revenue of $1.9B beating the consensus of $1.5B with EPS of $2.94 beating expectations for $2.79. The beat was driven by a combination of higher volumes, higher realizations, and efficiency gains. The company increased its total production guidance for the year to 370-372mboe/d1 (up from 363-370mboe/d) while lowering Capital Expenditure (CAPEX) guidance for the second time this year to $1.49-1.53B. The company raised the dividend for the third time this year to $2/share annually while authorizing a new $2B share repurchase program. Starting in 4Q21, the company plans to return 50% of Free Cash Flow to shareholders through the base dividend and a combination of buybacks and special dividends. Finally, the CEO Travis Stice announced plans to reduce methane emissions by 70% as part of the firm’s ESG initiative.”
4. ConocoPhillips (NYSE:COP)
Number of Hedge Fund Holders: 64
ConocoPhillips explores for, produces, transports, and markets crude oil, bitumen, natural gas, liquefied natural gas (LNG), and natural gas liquids worldwide. It is one of the top safe energy stocks for a retirement stock portfolio. On October 31, ConocoPhillips revealed that it was selected as Qatar Energy’s third international partner in the huge North Field South liquified natural gas project by taking a 6.25 percent stake.
On November 7, Truist analyst Neal Dingmann maintained a Buy rating on ConocoPhillips stock and raised the price target to $167 from $149, noting that the company’s third quarter results beat the expectations.
At the end of the third quarter of 2022, 64 hedge funds in the database of Insider Monkey held stakes worth $2.7 billion in ConocoPhillips, compared to 71 in the previous quarter worth $2.4 billion.
In its Q1 2022 investor letter, Diamond Hill Capital, an asset management firm, highlighted a few stocks and ConocoPhillips was one of them. Here is what the fund said:
“We redeployed capital into ConocoPhillips, which was trading at a discount to our estimate of intrinsic value and is well positioned over the long run due to its low-risk asset base.”
3. Chevron Corporation (NYSE:CVX)
Number of Hedge Fund Holders: 66
Chevron Corporation engages in integrated energy and chemical operations worldwide. It is one of the elite safe energy stocks for a retirement stock portfolio. On October 25, after releasing the 2022 methane report, Chevron said it has cut the methane intensity at its operations by 50%, making the company’s US upstream methane intensity 85% lower than the US upstream production sector average as of 2020.
On October 19, Jefferies analyst Lloyd Byrne initiated coverage of Chevron Corporation stock with a Hold rating and $171 price target, noting that the Option Value of energy is up again, driven by a constrained capital cycle.
At the end of the third quarter of 2022, 66 hedge funds in the database of Insider Monkey held stakes worth $27 billion in Chevron Corporation, compared to 59 in the preceding quarter worth $26 billion.
In its Q1 2022 investor letter, Diamond Hill, an asset management firm, highlighted a few stocks and Chevron Corporation was one of them. Here is what the fund said:
“Other top contributors in Q1 included multinational energy company Chevron Corp.. The company benefited from increased energy demand as COVID-related economic restrictions eased in tandem with concerns regarding supply interruptions related to Russia’s invasion of Ukraine.”
2. Exxon Mobil Corporation (NYSE:XOM)
Number of Hedge Fund Holders: 75
Exxon Mobil Corporation explores for and produces crude oil and natural gas. It is one of the prominent safe energy stocks for a retirement stock portfolio. On October 31, Truist analyst Neal Dingmann maintained a Hold rating on Exxon Mobil Corporation stock and raised the price target to $114 from $111, noting that the company’s third quarter results included US refining throughput levels not seen since 2008, as its Energy Products division posted 13% sequential growth.
Among the hedge funds being tracked by Insider Monkey, Lauderdale, Florida-based investment firm GQG Partners is a leading shareholder in Exxon Mobil Corporation with 33.9 million shares worth more than $3 billion.
In its Q2 2022 investor letter, First Eagle Investments, an asset management firm, highlighted a few stocks and Exxon Mobil Corporation was one of them. Here is what the fund said:
“Integrated oil and gas giant Exxon Mobil 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 industrywide 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.”
1. Tesla, Inc. (NASDAQ:TSLA)
Number of Hedge Fund Holders: 88
Tesla, Inc. (NASDAQ:TSLA) designs, develops, manufactures, leases, and sells electric vehicles, and energy generation and storage systems. It is one of the major safe energy stocks for a retirement stock portfolio. On October 31, Tesla held preliminary talks with Glencore about taking a stake as large as 10% to 20% in the Swiss commodities trading and mining giant. On October 25, Cathie Wood of ARK Invest said that she believes Tesla could expand the market 10 times with a cheaper electric vehicle.
On October 20, Oppenheimer analyst Colin Rusch maintained an Outperform rating on Tesla, Inc. stock and a price target of $436, noting that the company delivered third quarter results that were slightly better than expectations.
At the end of the third quarter of 2022, 88 hedge funds in the database of Insider Monkey held stakes worth $7.4 billion in Tesla, Inc., compared to 73 in the preceding quarter worth $7.2 billion.
In its Q2 2022 investor letter, Baron Funds, an asset management firm, highlighted a few stocks and Tesla, Inc. was one of them. Here is what the fund said:
“In 2014, before we began to invest in Tesla, I called Roger to ask whether he thought Elon Musk’s electric car business would succeed. I did not believe that Roger, an owner of dealerships that sell cars powered by internal combustion engines (ICE) would likely have a favorable opinion of Tesla’s prospects. That was principally for two reasons:
First, automobile manufacturing and distribution is unusually complicated, capital intensive, and highly regulated, which makes profitability problematic;
second, cars with ICE motors require extensive annual maintenance, and dealer services revenues, not profits from automobile sales, are the most important contributor to profits of perpetual licensed ICE car dealerships.
Penske Automotive Group is principally an ICE car dealer. Since electric cars are powered by batteries and need little service, franchised dealerships are incented to sell ICE, not EV automobiles. Further, Roger had been a long-term director of General Motors. General Motors’ ICE automobile business would be disrupted if Tesla were successful. (click here to read more…)
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This article is originally published at Insider Monkey.
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