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Even though oil prices are no longer at all-time highs, energy stocks remain attractive choices for any investment portfolio.
After all, global energy demand will continue to grow. The Earth’s population is increasing. Emerging and frontier markets are tapping into the power grid to grow their economies and join the global economy.
And the world’s developed markets won’t stand still – they’ll continue leveraging their positions to grow GDP, while many are also looking to reduce reliance on fossil fuels in favor of green energy.
Energy stocks provide investors with solid opportunities for growth and positive returns. Many also offer generous dividends, or quarterly payouts, that investors can use as added income or reinvest into their portfolios.
The Portfolio Grader identified these energy stocks as among the best to buy now:
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BP (NYSE:BP), also known as British Petroleum, brings home the profits. The company made $27.7 billion last year, setting a company record for profits in a single year as oil prices jumped to more than $100 per barrel.
Today, oil is less than $80 per barrel, but BP is still a cash cow. The company brought in $12 billion in operating income in the first quarter on revenue of $55.71 billion. Earnings per share were $1.66, much higher than the 24-cent EPS that analysts projected.
BP is spreading its wings by buying a 40% stake in a Harbour Energy (OTCMKTS:HBRIY) carbon capture project in the U.K. It wrapped up its acquisition of TravelCenters of America earlier this month.
Still not convinced? BP offers a hefty dividend yield of 4.2%. It has a “B” rating in the Portfolio Grader.
Source: JuliusKielaitis / Shutterstock.com
Shell (NYSE:SHEL) is another major oil and gas company with an international reach. The company is headquartered in London after relocating there from the Hague.
It seems to be immune from lower oil prices. In fact, the company posted a record profit for the first quarter because higher liquified natural gas volumes offset the reduced cost of oil.
Revenue for the quarter came in at $86.96 billion, while analysts were expecting only $39.57 billion. Earnings per share were also a pleasant surprise at $1.39 versus expectations for 86 cents per share.
Shell also announced it would continue its aggressive stock buyback plan, committed to repurchasing $4 billion in shares.
Shell is also leaning heavily into renewable energy. The company plans to build the largest renewable hydrogen plant in Europe, expecting it to open next year.
SHEL stock, which provides a dividend yield of 3.8%, has a “B” rating in the Portfolio Grader.
Exxon Mobil (XOM)
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As with BP and Shell, Exxon Mobil (NYSE:XOM) is coming off record-setting profits. It brought home a record $55.7 billion last year in profits, which was an all-time high for the company.
And the good times kept rolling in Q1, as Exxon’s first-quarter profit set another record and was more than double from a year ago. Exxon attributed the profits to solid production growth.
This was partly from the startup of new offshore developments and refining facilities. Gas and oil production was up nearly 300,000 barrels per day from a year ago.
Exxon reported $11.43 billion for the quarter, with earnings per share of $2.79.
Exxon also held preliminary talks this spring for a buyout of Pioneer Natural Resources (NYSE:PXD). If they consummate a deal, it would be the company’s biggest since Exxon and Mobil merged nearly 25 years ago. This is definitely one of the energy stocks to keep your eyes on.
XOM stock has a “B” rating in the Portfolio Grader.
Bloom Energy (BE)
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California’s Bloom Energy (NYSE:BE) doesn’t have the footprint or name recognition as the preceding three stocks on this list. But don’t overlook BE stock, which looks as if it’s ready to move higher.
Bloom builds, sells and installs oxide platforms that make electricity and hydrogen. Its products help businesses produce clean, hydrogen-based fuel products.
As I noted recently, Bloom is expected to benefit from the Inflation Reduction Act’s support for clean hydrogen production.
And the company is also making headway in the European market – a critical development, considering that Europe is ahead of the U.S. in embracing green alternatives. Bloom is working with Elugie, an energy services company, to serve clean fuel markets in Belgium, the Netherlands and Luxembourg.
With a price-to-sales ratio of less than 2, and a stock price just starting to bounce back from a 27% drop, BE stock is attractive for a buy-and-hold investor. BE gets a “B” rating in the Portfolio Grader.
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Headquartered in France, TotalEnergies (NYSE:TTE) is an energy company that operates in more than 130 countries worldwide. It’s the market leader in the U.K. for supplying natural gas, and it’s been supplying electricity since 2001.
But much of its effort as of late is in renewable energy. TotalEnergies says it expects to spend more than 30% of its annual budget on decarbonized energy. And it has its sights set on being one of the world’s top five solar and wind electricity producers by 2030.
Earnings for the first quarter included revenue of $58.23 billion and EPS of $2.61, both better than expectations for revenue of $50.16 billion and EPS of $2.50.
TTE stock has a “B” rating in the Portfolio Grader.
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ABB (NYSE:ABB) works in the robotics, automation and electrical equipment space. While the Swiss company is best known for its robotic systems, it’s also involved in maintaining power grids, transmission and distribution systems.
Its electrification division provides sustainable power solutions for low- and medium-voltage platforms, electric vehicle infrastructure, solar inverters and more.
The company brought in $7.86 billion in revenue in the first quarter, a 12.8% increase from a year ago. It also topped analysts’ expectations on both revenue and EPS.
The company, which plans to buy back up to $1 billion of stock over the next year, issued guidance for double-digit comparable revenue growth in the second quarter.
ABB stock has a “B” rating in the Portfolio Grader.
Alliance Resource Partners (ARLP)
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Alliance Resources Partners (NASDAQ:ARLP) stands out on this list because it’s a small-cap stock. Its market capitalization is just over $2 billion. That’s not chump change, but it’s smaller than many other names we’ve discussed here.
However, I like Alliance because its one of the biggest coal producers in the eastern U.S., and coal is still a vital part of the energy landscape for millions of people.
High coal prices mean great profits for ARLP and its shareholders. Revenues in the first quarter were $662.92 million, a 43% increase from just a year ago.
Another thing to like about Alliance Resources Partners is its structure. It’s a master limited partnership. That means the Alliance combines the tax benefits of private partnerships with the liquidity of publicly traded companies. The tax structure means higher-than-average returns in dividends or regular payouts. And currently, ARLP offers a yield of 14.6%.
ARLP stock has a “B” rating in the Portfolio Grader.
On the date of publication, Louis Navellier had a long position in BP, SHEL, XOM and ARLP. Louis Navellier did not have (either directly or indirectly) any other positions in the securities mentioned in this article.
The InvestorPlace Research Staff member primarily responsible for this article did not hold (either directly or indirectly) any positions in the securities mentioned in this article.
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