3 Outperforming Energy Stocks with More in the Tank

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  • The global energy sector rose to new highs last week with rising crude oil and natural gas prices.
  • With no end in sight to rising oil and gas, Wall Street analysts continue to raise earnings estimates
  • Too hot to touch or too hot to ignore?
  • This is the question when it comes to increasing energy reserves.

The global energy sector rose to new highs last week with rising crude oil and natural gas prices. It’s an impressive investment for a group that two years ago investors didn’t dare touch with a 10-foot stick.

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Against the backdrop of banned Russian imports, rising global demand and scarce supply are pushing up the price of oil again after it was corrected from the 14-year high set in March. Natural gas prices are also rising before the summer air conditioning season. These trends bode well for the profitability of oil and gas-related companies, many of which appear to be ready for a second consecutive quarter of record results.

With no end in sight to the rise in oil and gas, Wall Street analysts continue to raise their earnings estimates for U.S. producers, refiners and pipeline operators. This makes many investors enjoy the momentum of energy stocks despite its 50% increase to date.

According to forward-looking earnings estimates and selling price targets, there seems to be a lot more for these three energy companies.

Are Halliburton Shares Still a Buy?

Halliburton Company (NYSE: HAL) has risen more than 80% this year, but analysts still call it a buy. This is due to the fact that the oil field equipment and services provider is expected to deliver a performance similar to the 24% revenue growth of the last quarter and an 84% improvement in results.

The company is seeing strong demand from both the U.S. and overseas market with oil explorers in a hurry to take advantage of the favorable price environment. Margins are on the rise, as is Halliburton’s willingness to share wealth. The board has recently tripled its quarterly dividend payment and is likely to approve additional increases given a payout ratio of less than 20%.

The year-round consensus earnings estimate implies a 77% growth over the 2021 year of recovery. The 23x Halliburon P / E ratio has room for expansion, equal to than the share price. Most of the street price targets posted since the first quarter update are in the top $ 40 and some have five handles.

Will Phillips 66 shares continue to rise?

Phillips 66 (NYSE: PSX) it is benefiting from high commodity prices in a slightly different way. As both a medium and a low-level operator, the company is generating revenue from the transportation of petroleum liquids and natural gas (NGL), as well as the manufacture of petrochemicals and plastics.

In the first quarter, Phillips 66 fluctuated with a profit that was almost the mirror image of the net loss it recorded the previous year. Revenue soared 68 percent to $ 36.7 billion, driven by good results in the chemicals and refining business. With demand for refined products such as gasoline, diesel and aircraft fuel expected to have a higher trend, Wall Street now expects a massive $ 5.00 increase in earnings per share (EPS) from 2022 up to $ 9.62.

Profits are expected to return to normal next year, but are still well above what they were in 2021. Even after advancing 40% this year, stocks are trading slightly below their P / E five-year history of 19x.

Like many energy stocks, Phillips 66 is in a 52-week high, but well below its all-time high before the pandemic began. This month, five companies have reiterated their buy ratings, including Piper Sandler, who raised their target to $ 120 on the street, noting that there are more “legs” in this bounce story.

What is the advantage of Enbridge Stock?

Enbridge Inc. (NYSE: ENB) it has more than doubled from its March 2020 low, but remains about 20% away from its all-time high. North America’s leading energy infrastructure provider posted first-quarter growth of 24%, but saw a sharp drop in earnings linked to foreign exchange hedging losses in its energy services segment. The currency reversal overshadowed what was otherwise an outstanding quarter, but is expected to be more of an anomaly than a pattern.

Analysts anticipate higher overall profits in each of the next three quarters as Enbridge meets the need for its extensive network of oil and gas pipelines during the economic recovery. The company is responsible for most Canadian crude oil exports to the United States and nearly one-fifth of U.S. natural gas consumption. It also has an emerging wind energy business with facilities located off the coasts of Canada and Europe.

Much of Enbridge’s return potential comes from the company’s generous dividend payments. The most recent quarterly dividend represents a term return of 5.7%, well above the industry average. Thus, while recent analyst price targets point to a minimal increase in the share price, investors can expect a substantial dividend yield to contribute to the overall return on the stock.

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