The global energy sector continues to reel under a severe supply crunch, inflicted by first the pandemic and then the Russia-Ukraine conflict. Critical political disruptions in Libya, a major oil exporter, might lead to further supply disruptions in the energy industry.
Ed Moya, the senior market analyst at Oanda, said, “The one trade that everyone can agree upon is that the oil market will likely remain tight.”
However, demand remains robust. According to the U.S. Energy Information Administration (EIA), global consumption of petroleum and liquid fuels will average 99.40 million b/d for 2022, a 2.10 million b/d year-over-year increase. Moreover, according to Market Research Future, the natural gas liquid market is projected to grow at a CAGR of 5.7% from 2022 to 2030.
Investors’ interest in energy stocks is evident from the Energy Select Sector SPDR ETF’s (XLE) 7.2% gains over the past month. Therefore, investors looking to benefit from the industry’s solid prospects could consider buying energy stocks Valero Energy Corporation (VLO), Suncor Energy Inc. (SU), Marathon Oil Corporation (MRO), and APA Corporation (APA), which are on the momentum this year.
Valero Energy Corporation (VLO)
VLO manufactures, markets, and sells transportation fuels and petrochemical products in the United States, Canada, the United Kingdom, Ireland, and internationally. The company operates through three segments: Refining; Renewable Diesel; and Ethanol.
On July 28, 2022, Joe Gorder, VLO’s Chairman and CEO, said, “We continue to maximize refinery run rates while executing our long-standing commitment to safe, reliable, and environmentally responsible operations.”
VLO’s revenues came in at $51.64 billion for the second quarter ended June 30, 2022, up 86.1% year-over-year. Its net income increased 2,796.9% year-over-year to $4.69 billion. Moreover, the company’s EPS increased 2,866.7% year-over-year to $11.57.
Analysts expect VLO’s revenue to increase 59.7% year-over-year to $182.02 billion in 2022. Its EPS is estimated to increase 758.7% year-over-year to $24.13 in 2022. It surpassed EPS estimates in all four trailing quarters. The stock has gained 64.3% year-to-date to close the last trading session at $123.42.
VLO’s POWR Ratings reflect its solid prospects. It has an overall rating of B, equating to a Buy in our POWR Ratings system. The POWR Ratings assess stocks by 118 different factors, each with its own weighting.
Also, the stock has an A grade for Momentum and a B for Growth, Value, and Quality. Click here to access the additional POWR Ratings for VLO (Stability and Sentiment). VLO is ranked #10 out of 97 stocks in the B-rated Energy - Oil & Gas industry.
Suncor Energy Inc. (SU)
Headquartered in Calgary, Canada, SU is an integrated energy company. It searches for, obtains, develops, produces, moves, refines, and markets crude oil both domestically and internationally. It operates through Oil Sands; Exploration and Production; Refining and Marketing; and Corporate and Eliminations segments.
On July 18, 2022, SU announced its agreement with Elliott Investment Management L.P., by virtue of which SU will appoint three new independent directors. A new committee will also be formed to oversee a strategic review of SU’s downstream retail business. This could ensure better business prospects for the company.
SU’s total revenues and other income came in at C$16.20 billion ($12.47 billion) for the second quarter ended June 30, 2022, up 78.2% year-over-year. Its net earnings increased 360.4% year-over-year to C$4 billion ($3.08 billion). Moreover, the company’s EPS increased 387.9% year-over-year to $2.83.
Street expects SU’s revenue to increase 45% year-over-year to $45.26 billion in 2022. Its EPS is estimated to increase 274.5% year-over-year to $7.60 in 2022. The stock has gained 39.2% year-to-date to close the last trading session at $34.83.
SU’s strong fundamentals are reflected in its POWR Ratings. It has an overall B grade, equating to a Buy in our POWR Ratings system. Also, it has an A grade for Momentum and Quality and a B for Growth. It is ranked #27 in the same industry. Click here to access the SU ratings for Stability, Sentiment, and Value.
Marathon Oil Corporation (MRO)
MRO conducts business both domestically and abroad as an independent exploration and production company. The company is involved in the exploration, production, and marketing of natural gas, natural gas liquids, and crude oil, as well as liquefied natural gas and methanol, which are products made from natural gas.
MRO’s total revenues came in at $2.30 billion for the second quarter ended June 30, 2022, up 101.5% year-over-year. Its income from operations increased 1,132.4% year-over-year to $1.29 billion. Moreover, the company’s EPS increased 500% year-over-year to $1.32.
MRO’s revenue is expected to increase 47.5% year-over-year to $8.07 billion in 2022. Its EPS is estimated to increase 214.6% year-over-year to $4.94 in 2022. It surpassed EPS estimates in all four trailing quarters. The stock has gained 63.2% year-to-date to close the last trading session at $26.79.
MRO has an overall B grade, equating to a Buy in our POWR Ratings system. Also, it has an A grade for Momentum and Quality and a B for Growth. It is ranked #33 in the same industry. Click here to access the MRO ratings for Stability, Sentiment, and Value.
APA Corporation (APA)
APA explores for, develops, and produces oil and gas properties through its subsidiaries. It conducts business in the United States, Egypt, and the United Kingdom and engages in offshore exploration.
On August 3, 2022, John J. Christmann IV, APA’s CEO and President said, “Our diversified, unhedged portfolio benefitted from high prices across all three product streams, and we managed our largest spending categories – capital investment, operating costs, and general & administrative – very well despite an overall challenging supply chain and cost environment.”
APA’s total revenues came in at $3.05 billion for the second quarter ended June 30, 2022, up 71.3% year-over-year. Its net income increased 193% year-over-year to $926 million. Moreover, the company’s EPS increased 230.5% year-over-year to $2.71.
Analysts expect APA’s revenue to increase 38.8% year-over-year to $11.01 billion in 2022. Its EPS is estimated to increase 137.1% year-over-year to $9.25 in 2022. The stock has gained 53.8% year-to-date to close the last trading session at $41.36.
APA has an overall B grade, equating to a Buy in our POWR Ratings system. Also, it has an A grade for Momentum and Quality and a B for Growth and Value. It is ranked #8 in the same industry. Click here to access the APA ratings for Stability and Sentiment.
VLO shares were trading at $117.97 per share on Tuesday afternoon, down $5.45 (-4.42%). Year-to-date, VLO has gained 61.56%, versus a -15.64% rise in the benchmark S&P 500 index during the same period.
About the Author: Riddhima Chakraborty
Riddhima is a financial journalist with a passion for analyzing financial instruments. With a master's degree in economics, she helps investors make informed investment decisions through her insightful commentaries.
4 Energy Stocks That Have Continued to Climb in 2022 StockNews.com
