Oil prices might see growth owing to supply disruptions and changing market dynamics. To capitalize on this trend, one could watch out for shares of solid energy stocks Energy Transfer LP (ET), ChampionX Corporation (CHX), and Secure Energy Services Inc. (SECYF), which are currently showing upward growth momentum.
After experiencing a prolonged downturn, analyst Giovanni Staunovo from UBS suggests that the decline in U.S. crude oil prices could be attributed to traders' skepticism regarding OPEC's capacity to sustain production cuts amid reduced price thresholds.
However, U.S. crude oil prices experienced a slight increase after Hurricane Francine disrupted oil production in the Gulf of Mexico before making landfall in Louisiana. The Bureau of Safety and Environmental Enforcement reports that more than 730,000 barrels per day of Gulf oil production are currently shut-in.
UBS now forecasts that oil prices will rise in the short term, with Brent crude expected to exceed $80 per barrel in the coming months.
On another note, the International Energy Agency (IEA) has adjusted its global oil demand growth forecast for 2024 to 900,000 barrels per day, down from 2.1 million barrels per day. This reduction is attributed to a significant slowdown in Chinese oil consumption, which is anticipated to grow by only 180,000 barrels per day this year.
But despite the IEA's downward revision, OPEC remains more optimistic about Chinese and global oil consumption growth for the year. OPEC's outlook suggests continued confidence in the resilience of oil demand despite broader economic uncertainties and shifts towards alternative fuels.
Considering these trends, let’s examine the fundamentals of three energy stocks that continue to show upward momentum, starting with #3.
Stock #3: Energy Transfer LP (ET)
ET owns and manages a diversified portfolio of energy assets, including over 130,000 miles of pipelines and associated infrastructure. Its primary operations involve natural gas midstream services, intrastate and interstate transportation and storage of natural gas, crude oil, natural gas liquids, refined product transportation, and terminalling.
On July 16, ET and Sunoco announced a joint venture to merge their Permian Basin crude oil and water gathering assets, with ET holding a 67.5% stake and serving as the operator.
The venture, managing over 5,000 miles of pipelines and 11 million barrels of storage capacity, would enhance ET’s infrastructure and expand its market reach, driving growth and operational efficiency.
On July 15, ET completed its $2.28 billion acquisition of WTG Midstream, adding 6,000 miles of gas-gathering pipelines and eight processing plants to its Permian Basin network. The acquisition is set to boost ET’s distributable cash flow per unit starting in 2025, further fueling its growth and strengthening its competitive position in the energy sector.
ET’s revenues for the fiscal 2024 second quarter that ended June 30, 2024, rose 13.1% year-over-year to $20.73 billion. Its operating income grew 25.2% from the year-ago value to $2.30 billion. Plus, the company’s adjusted EBITDA rose 20.4% from the year-ago value to $3.76 billion.
Additionally, ET’s net income came in at $1.99 billion, up 61.6% from the prior year’s quarter. Meanwhile, its net income per common unit increased 40% year-over-year to $0.35.
Street expects ET’s revenue for the fiscal third quarter ending September 2024 to increase 13.2% year-over-year to $23.47 billion. Likewise, the company’s EPS for the ongoing quarter is expected to grow 120.3% from the prior year’s period to $0.33.
Shares of ET have surged 7.4% over the past six months and 18% over the past year to close the last trading session at $16.10. In addition, ET is trading above its 50-day and 200-day moving averages of $16.07 and $15.21, respectively.
ET’s POWR Ratings reflect its positive outlook. The stock has an overall rating of B, which translates to a Buy in our proprietary rating system. The POWR Ratings assess stocks by 118 different factors, each with its own weighting.
ET has an A grade in Growth and a B for Value, Momentum, and Stability. Within the Energy – Oil & Gas industry, it is ranked #2 out of 80 stocks.
To see the other ET ratings for Sentiment and Quality, click here.
Stock #2: ChampionX Corporation (CHX)
CHX provides chemistry solutions, artificial lift systems, and engineered equipment for oil and gas drilling. The company’s segments consist of Production Chemical Technologies; Production & Automation Technologies; Drilling Technologies; and Reservoir Chemical Technologies.
On April 2, CHX announced a definitive agreement with Schlumberger Limited (SLB), a global energy innovation leader, to be acquired in an all-stock transaction. CHX shareholders will receive 0.735 shares of SLB common stock for each CHX share. Becoming part of SLB would enhance CHX’s portfolio, providing the resources and reach to lead in delivering energy sustainably.
On July 9, CHX acquired RMSpumptools Limited, a designer of advanced mechanical and electrical solutions for artificial lift applications. This strategic acquisition allows CHX to create more value for customers and expand into international markets, including the Middle East, Latin America, and global offshore projects.
For the fiscal 2024 second quarter that ended on June 30, CHX’s revenue came in at $893.27 million. Its gross profit amounted to $279.85 million. Moreover, the company’s net income attributable to CHX came in at $52.57 million or $0.27 per share. As of June 30, 2024, CHX’s cash and cash equivalents stood at $393.30 million, up from $288.56 on December 31, 2023.
For the fiscal third quarter ending September 2024, CHX’s revenue is expected to increase 5.6% year-over-year to $992.61 million. Its EPS for the ongoing quarter is expected to be $0.51, increasing 24.5% from the previous year’s period.
CHX has gained 1.6% over the past nine months to close the last training session at $28.86.
CHX’s solid fundamentals are reflected in its POWR Ratings. The stock has an overall rating of B, which translates to a Buy in our proprietary rating system.
CHX has a B grade for Quality, Growth, and Momentum. It is ranked #11 out of 50 stocks in the Energy – Services industry.
In addition to the POWR Ratings we’ve stated above, we also have CHX ratings for Value, Sentiment, and Stability. Get all CHX ratings here.
Stock #1: Secure Energy Services Inc. (SECYF)
Headquartered in Calgary, Canada, SECYF specializes in waste management and energy infrastructure. The company’s segments include Environmental Waste Management; Energy Infrastructure; and Oilfield Services.
During the second quarter that ended June 30, 2024, SECYF’s total revenue rose 43.2% year-over-year to CAD 2.55 billion ($1.88 billion), of which its Oil purchase and resale revenue increased 55% from the year-ago value to CAD 2.22 billion ($1.63 billion).
Moreover, the company’s net income came in at CAD 32 million ($23.56 million) and CAD 0.12 per share for the quarter, respectively. In addition, the company’s discretionary free cash flow grew 26.2% from the year-ago value to CAD 53 million ($39.02 million).
Building on its strong performance in the first half of 2024, the success of SECYF's organic growth investments, and the added Adjusted EBITDA from its metal recycling acquisition, the company has increased its full-year 2024 Adjusted EBITDA guidance to $470 - $490 million, up from the previously stated $450 - $465 million.
Shares of SECYF have surged 33.9% over the past nine months and 43.2% over the past year to close the last trading session at $8.42. Moreover, the stock is trading above its 200-day moving average of $8.07.
SECYF’s strong fundamentals are mirrored in its POWR ratings. The stock has an overall rating of A, which equates to a Strong Buy in our proprietary rating system.
SECYF has an A grade for Value. In addition, it has a B grade for Growth and Momentum. Within the Energy – Oil & Gas industry, SECYF has topped among the 80 stocks.
Click here to access additional ratings of SECYF for Sentiment, Stability, and Quality.
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ET shares were trading at $16.16 per share on Friday morning, up $0.16 (+1.00%). Year-to-date, ET has gained 24.58%, versus a 18.99% rise in the benchmark S&P 500 index during the same period.
About the Author: Aanchal Sugandh
Aanchal's passion for financial markets drives her work as an investment analyst and journalist. She earned her bachelor's degree in finance and is pursuing the CFA program. She is proficient at assessing the long-term prospects of stocks with her fundamental analysis skills. Her goal is to help investors build portfolios with sustainable returns.
3 High-Momentum Energy Stocks to Watch in 2024 StockNews.com
