Today, we’ll look at stocks representing firms in the oil/natural gas sector. These businesses locate, extract, process, and provide the economy with oil, natural gas, and NGLs (natural gas liquids). The worth of their undeveloped oil and gas reserves contributes significantly to their overall value. Oil has seen some good runs on the stock exchange recently. Companies have continued to invest in supply, and even with the transition to electric vehicles, daily usage levels will likely remain stable for many years.
As offshore production increases, the industry shift tells us that oilfield services businesses can make for ideal long-term growth bets. U.S. oil corporations continue to practice caution with their financial resources. They understandably fear a price drop similar to the one that occurred between mid-2014 and 2016, which led several oil producers and others in the industry to declare bankruptcy. However, worries fade as drillers and service providers make larger in-house investments. Several of these oil companies will proceed with their projects and are likely to see success despite volatility in commodity prices. Let’s not forget, either, that these firms tend to offer robust quarterly dividend payouts.
Let’s look at three oil stocks that I like right now. I picked these from the pack while looking for strong earnings, growth, sustainability, and analyst sentiment— they’re telling us to buy:
EOG Resources Inc. (EOG)
EOG Resources, Inc. (EOG) is an American energy company engaged in oil exploration. EOG operates in Delaware and is headquartered in the Heritage Plaza building in Houston, TX. EOG is well-ranked on the Fortune 500 and on the Forbes Global 2000. EOG was founded in 1999 by Mark G. Papa. Nearing the bottom of its 52-week range and down by 11.73% YTD, EOG has a market cap of $67.2 billion. EOG shows TTM revenue of $25.6 billion at $13.21 per share, from which it profited $7.8 billion through its 30.28% net margin. EOG has a P/E ratio of 7.14x, most recently beating analysts’ EPS and revenue projections by 8.08% and 14.83%, respectively. EOG boasts year-over-year growth in EPS (+414.93%), net income (+418.72%), and profit margin (+528.35%). EOG presently has a dividend yield of 2.89%, with a quarterly payout of 83 cents ($3.30/yr) per share. With a 10-day average trading volume of 3.48 million shares, EOG has a median price target of $146, with a high of $171 and a low of $115. This represents a potential price increase of almost 50%; the analyst consensus gives EOG 27 buy ratings and 6 hold ratings.
BP PLC (BP)
BP plc (BP) is a multinational oil and gas company. BP is regarded as one of the oil “supermajors” and is one of the world’s largest companies measured by revenues and profits. BP was founded on April 14th, 1909, in London, United Kingdom, by William Knox D’Arcy and Charles Greenway, and it is headquartered in London, U.K. BP stock is currently up YTD by 5.98%; it has a market cap of $108 billion, an enterprise value of $140 billion, and a safe beta score of 0.73. BP reports a TTM revenue of $248 billion at $8.40 per share, offering an ROE (return on equity) percentage of 38.67%. BP has a P/E ratio of 20.63x, a forward P/E of 6x, a P/S (price to sales) ratio of 0.48x, and a P/B (price to book) of 1.60x. At its last earnings call, BP surpassed analysts’ EPS projection by a 17.55% margin and shows year-over-year growth in revenue (+14.27%), EPS (+193.27%), net income (+140.32%), and profit margin (+135.28%). BP has a dividend yield of 4.28%, with a quarterly payout of 40 cents ($1.60/yr) per share. With a 10-day average volume of 10.27 million shares, BP has been assigned a median price target of $45.61, with a high of $74.76 and a low of $40, representing a potential 102% price jump. BP has 19 buy ratings and 12 hold ratings.
Schlumberger NV (SLB)
Schlumberger Ltd. (SLB) is an oilfield services company. As of 2022, SLB was noted as the world’s largest offshore drilling company and the world’s largest offshore drilling contractor by revenue. SLB was founded in 1926 in Paris, France, by the Schlumberger brothers Conrad and Marcel, and is currently headquartered in Houston, TX. SLB, considered undervalued by some on Wall Street, is currently down by 12.81% YTD. SLB has a market cap of around $70 billion and an enterprise value of $81.3 billion. SLB shows $29.8 billion in TTM revenue at $2.68 per share, making a $3.4 billion profit with a net margin of 12.21%. SLB has a P/E ratio of 18.5x, a forward P/E of 16.5x, and a PEG ratio of 1.12x. SLB has had success with its earnings reports, most recently surpassing analysts’ projections for EPS and revenue by 3.67% and 3.76%, respectively— the quarter prior, by margins of 4.90% and 1.17%. SLB has an operating free cash flow of $3.92 billion and a 10-day average trading volume of 9.27 million shares. SLB has a dividend yield of 2.15%, with a quarterly payout of 25 cents ($1.00/yr) per share. SLB has a median price target of $65, with a high of $75 and a low of $49, representing a potential price increase of 61%. Analysts are bullish on this one; SLB has 30 buy ratings and 2 hold ratings.
– Adam @ Wall St. Watchdogs
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