In this article we discuss the Top 5 Energy Sector Stocks for 2021. If you want to read our detailed analysis of the energy sector outlook for 2021 and beyond, go directly to Top 10 Energy Sector Stocks for 2021.
At Insider Monkey we leave no stone unturned when looking for the next great investment idea. For example, lithium mining is one of the fastest growing industries right now, so we are checking out stock pitches like this emerging lithium stock. We go through lists like the 10 best hydrogen fuel cell stocks to pick the next Tesla that will deliver a 10x return. Even though we recommend positions in only a tiny fraction of the companies we analyze, we check out as many stocks as we can. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. You can subscribe to our free daily newsletter on our homepage. Keeping this in mind let’s take a look at the top energy stocks to buy for 2021:
5. ConocoPhillips (NYSE: COP)
Texas-based ConocoPhillips is one of the top 10 energy sector stocks for 2021. The company is engaged in hydrocarbon and other energy resources exploration all over the world. As of the end of 2019, the company had about 5,262 million barrels of oil equivalent energy resources. Earlier in February, S&P Global lowered its credit ratings for ConocoPhillips (NYSE:COP), citing the worldwide transition from fossil fuels to green energy. The company has a dividend yield of 3.5%.
As of the end of the fourth quarter, 49 hedge funds tracked by Insider Monkey were long ConocoPhillips.
4. Schlumberger Limited (NYSE: SLB)
Despite losing about 15.5% in value over the last 12 months, oil field services and energy company Schlumberger remains on the portfolios of 50 hedge funds out of the 887 tracked by Insider Monkey, as of the end of the fourth quarter. The total value of these stakes is $1.23 billion. In January 2021, the stock was upgraded to Buy from BofA, with the price target hiked to $31 from $27. The bank believes the oil stock would gain from the overall recovery in international demand in the second half of 2021.
Earlier in February, Schlumberger appointed Florence Lambert as CEO of Genvia, the company’s new clean hydrogen production technology venture.
First Eagle Investment Management, which returned 5.64% for the third quarter 2020, highlighted a few stocks in their investor letter, and Schlumberger Limited is one of them. Here is what Baron Asset Fund stated:
“Oilfield services giant Schlumberger struggled to gain traction following the initial pandemic-related selloff of the first quarter. The company has been aggressive in cutting costs in response to the difficult operating environment; it has slashed about 25% of its workforce, reduced its dividend and sold off assets, including its North American hydraulic fracking business. We see Schlumberger’s financial strength and dominant market position as sources of resilience that may potentially enable it to respond positively if and when oil prices rebound.”
3. NextEra Energy, Inc. (NYSE: NEE)
Florida-based NextEra is one of the top 10 energy sector stocks for 2021. The company has over 46 gigawatts of generating capacity, and provides electricity to over 10 million people in the U.S. NextEra stock is up over 14% in the last 12 months. It is one of the biggest solar and wind energy producers in the country. The company recently announced that it plans to add about 30 gigawatts of renewable projects to its portfolio by 2024, above the analysts’ consensus of 20 gigawatts.
Hedge funds are also increasing their hold in the company. At the end of the fourth quarter of 2020, 32 hedge funds tracked by Insider Monkey were bullish on NextEra, compared to 22 funds a quarter earlier.
2. Exxon Mobil Corporation (NYSE: XOM)
ExxonMobil is one of the top 10 energy sector stocks for 2021. Hedge funds are loading up on XOM, as 63 hedge funds tracked by Insider Money moved into 2021 with XOM in their portfolios, up from 52 funds a quarter earlier. Jean-Marie Eveillard’s First Eagle Investment Management owns $1.1 million worth of XOM shares, while Irving Kahn’s Kahn Brothers has a $666 million stake in the oil company.
Oil prices nudged higher this week as U.S. supplies dropped amid extreme winter conditions and demand continued to rise as the economy comes back to normal.
1. PG&E Corporation (NYSE:PCG)
PG&E is one of the major utility companies in the U.S. with a growing exposure to renewable energy including solar and wind. The company offers several green energy programs to its customers across the country. Recently, Bank of America’s Julien Dumoulin Smith reiterated a Buy rating for the stock with a $14 price target. The analyst is bullish on the company’s new wildfire mitigation plan .
As of the end of the fourth quarter, 66 hedge funds tracked by Insider Monkey reported owning stakes in PG&E. One of the biggest stakeholders of the company is Dan Loeb’s Third Point which owns over 84 million shares of the company.
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