Global crude oil prices have been higher lately, driven by surging global demand for energy and tight supplies amid OPEC+ voluntary cuts and geopolitical concerns, strengthening the energy industry’s prospects. This is further supplemented by new innovative technological solutions easing industry operations.
Given the industry tailwinds, it could be wise to invest in fundamentally sound energy stocks Cenovus Energy Inc. (CVE), Repsol, S.A. (REPYY), and Subsea 7 S.A. (SUBCY) for substantial gains.
As per a report by the Economist Intelligence Unit (EIU), global energy consumption is expected to increase by 1.8% in 2024. Despite high prices and continuous supply chain disruptions, demand for fossil fuels will reach record levels. Further, the World Bank warned that Middle East escalation could trigger an oil price shock.
OPEC predicted solid fuel use in the summers and stuck to its forecast for relatively strong growth in global oil demand this year. In a monthly report, the agency expects world oil demand to grow by 2.25 million bpd in 2024 and by 1.85 million bpd next year. A boost to economic growth could provide a tailwind to oil prices, which are hovering around $84 a barrel.
Moreover, the adoption of advanced technologies accelerates innovation in the energy sector as companies transform their operations with new IT developments like artificial intelligence (AI) and machine learning (ML). The AI in the energy market is expected to grow by 29.9% during the forecast period (2024-2030), resulting in a market volume of $55.38 billion.
Besides, with a focus on operational efficiency, supportive government initiatives and incentives, and data security concerns, the global energy-as-a-service market is projected to grow at a CAGR of 6.2% and reach around $101.27 billion by 2031.
Given the industry’s robust outlook, investing in quality energy stocks such as CVE, REPYY, and SUBCY could be wise for future gains.
Cenovus Energy Inc. (CVE)
Headquartered in Calgary, Canada, CVE develops, produces, refines, transports, and markets crude oil, natural gas, and refined petroleum products internationally. It operates through four segments: Oil Sands; Conventional; Offshore, Canadian Refining; and U.S. Refining.
On May 1, CVE’s Board of Directors declared a quarterly base dividend of $0.18 per common share, payable on June 28, 2024, to shareholders of record as of June 14, 2024. The Board also declared a variable dividend of $0.13 per common share to shareholders of record on May 17, 2024, payable on May 31, 2024.
Further, the Board declared a quarterly dividend on each of the cumulative redeemable first preferred shares – Series 1 ($0.16), Series 2 ($0.42), Series 3 ($0.29), Series 5 ($0.29) and Series 7 ($0.24) – payable on July 2, 2024, to shareholders of record as of June 14, 2024.
CVE pays an annual dividend of $0.42 per share, which translates to a yield of 2.06% on the current share price. Its four-year average dividend yield is 1.46%. The company’s dividend payouts have grown at a CAGR of 210% over the past three years.
CVE’s revenues increased 9.3% year-over-year to C$13.40 billion ($9.84 billion) during the first quarter that ended March 31, 2024. Its earnings before income tax grew 162.1% year-over-year to C$1.55 billion ($1.14 billion). Its net earnings came in at C$1.18 billion ($863.86 million) and C$0.62 per common share, up 84.9% and 93.7% from the prior year’s quarter, respectively.
Furthermore, as of March 31, 2024, the company’s total current assets stood at C$10.84 billion ($7.96 billion) versus C$9.71 billion ($7.13 billion), respectively.
Analysts expect CVE’s revenue for the second quarter (ending June 2024) to increase 16.3% year-over-year to $11.31 billion, and its EPS for the ongoing quarter is expected to grow 80.4% year-over-year to $0.40. For the fiscal year 2024, the company’s revenue and EPS are expected to grow 11.2% and 28.7% year-over-year to $43.10 billion and $2.06, respectively.
Shares of CVE have surged 12.3% over the past six months and 25.4% over the past year to close the last trading session at $19.97.
CVE’s POWR Ratings reflect its robust outlook. The stock has an overall rating of A, which translates to a Strong Buy in our proprietary rating system. The POWR Ratings are calculated by considering 118 different factors, with each factor weighted to an optimal degree.
CVE has a B grade for Sentiment, Value, and Growth. It is ranked #2 out of 82 stocks in the Energy – Oil & Gas industry.
In addition to the POWR Ratings we’ve stated above, we also have other ratings of CVE for Quality, Momentum, and Stability. Get all CVE ratings here.
Repsol, S.A. (REPYY)
Based in Madrid, Spain, REPYY operates as a multi-e energy company globally. The company’s three business segments include Upstream; Industrial; and Commercial and Renewables. The company engages in the exploration, development, and production of crude oil and natural gas reserves, refining activities, and petrochemicals.
On April 11, REPYY completed the construction of Frye Solar in the United States, its largest photovoltaic plant till now, with nearly one million panels a total installed capacity of 637 MW, and 570 MW currently in operation. This marked a major milestone for the company, contributing mainly to its commitment to become a net-zero emissions company by 2050.
On April 10, REPYY entered the biomethane market with an agreement to take a 40% shareholding in Genia Bioenergy. The agreement between REPYY and Genia Bioenergy includes 19 of its under-development biomethane plants. The alliance will enable REPYY to add significant human and technical capabilities to position itself early in this growing sector.
Also, on April 3, REPYY commenced large-scale production of renewable fuels in Cartagena, the first plant of its kind in the Iberian Peninsula fully dedicated to producing renewable fuels on an industrial scale. The plant has the capacity to produce 250,000 tons of renewable fuels annually from waste, such as used cooking oil.
During the first quarter that ended March 31, 2024, REPYY reported revenue from operating activities of €15.69 billion ($17.05 billion), and its adjusted income was €1.27 billion ($1.38 billion). The company’s net income and EPS came in at €969 million ($1.05 billion) and €0.79, up 153% and 163.3% from the prior quarter, respectively.
In addition, the company’s EBITDA increased 4% from the previous quarter to €2.14 billion ($2.33 billion). Its total assets stood at €65.20 billion ($70.87 billion) as of March 31, 2024, compared to €63.64 billion ($69.17 billion) as of December 31, 2023.
Street expects REPYY’s revenue for the fiscal year (ending December 2024) to increase 1.1% year-over-year to $64.06 billion. Over the past six months, REPYY’s stock has gained 7.3% and 12.3% over the past year to close the last trading session at $16.19.
REPYY’s sound fundamentals are reflected in its POWR Ratings. The stock has an overall rating of A, which translates to a Strong Buy in our proprietary rating system.
The stock has a B grade for Value, Momentum, Growth, and Stability. Within the A-rated Foreign – Oil & Gas industry, REPYY is ranked #5 out of 40 stocks.
Click here to access additional ratings of REPYY for Sentiment and Quality.
Subsea 7 S.A. (SUBCY)
Headquartered in Luxembourg, SUBCY delivers offshore projects and services for the energy industry globally. It offers subsea field development products and services, like project management, design, and engineering. It also provides engineering, procurement, commissioning, and installation of subsea umbilicals, risers, and flowlines.
On May 10, SUBCY was awarded a large contract by Turkish Petroleum Offshore Technology Center AS relating to the Sakarya field development in the Black Sea, offshore Türkiye. The deal will expand the existing contract with Subsea Integration Alliance awarded in May 2023 to include the installation of Türkiye’s first floating production unit as part of Phase 2a development.
The collaboration aligns well with SUBCY’s operations, allowing it to explore the full potential of the Sakarya gas field and advance Türkiye’s energy security goals.
On May 2, SUBCY announced a new long-term strategic collaboration agreement between the Subsea Integration Alliance (comprising Subsea7 and OneSubsea) and Equinor ASA (EQNR). The deal enables early information sharing and other collaborative benefits critical to unlocking subsea projects by making them economically viable.
For the first quarter that ended March 31, 2024, SUBCY’s revenue increased 12% year-over-year to $1.39 billion, and its gross profit rose 57.4% from the year-ago value to $81.40 million. The company’s net income and EPS came in at $29 million and $0.09, against a net loss of $29.20 million and $0.07 per share during the prior year’s quarter, respectively.
In addition, its adjusted EBITDA increased 51.4% from the year-ago value to $162 million.
As per the company’s full-year 2024 outlook, SUBCY expects revenue between $6 billion and $6.5 billion, and its adjusted EBITDA is expected to range from $950 million to $1 billion.
Analysts expect SUBCY’s revenue for the second quarter (ending June 2024) to increase 12.4% year-over-year to $1.71 billion. The company’s revenue for the fiscal year 2024 is expected to grow 10.3% year-over-year to $6.59 billion. Moreover, the company topped the consensus revenue estimates in three of the trailing four quarters.
SUBCY’s stock has surged 30% over the past six months and 65.5% over the past year to close the last trading session at $17.71.
SUBCY’s POWR Ratings reflect its bright prospects. The stock has an overall rating of B, equating to a Buy in our proprietary rating system.
SUBCY has an A grade for Momentum and Growth. The stock also has a B grade for Sentiment and Stability. The stock is ranked #7 among 51 stocks in the Energy - Services industry.
To access SUBCY’s other ratings for Value and Quality, click here.
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CVE shares were trading at $20.39 per share on Monday morning, up $0.19 (+0.94%). Year-to-date, CVE has gained 23.75%, versus a 12.05% rise in the benchmark S&P 500 index during the same period.
About the Author: Rjkumari Saxena
Rajkumari started her career as a writer but gradually shifted her focus to financial journalism, leveraging her educational background in Commerce. Fascinated by the interplay of business and economic shifts in equities, she aspires to evolve as an analyst. With a knack for simplifying complex financial concepts, her mission is to empower investors with insights that lead to profitable decisions.
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