Top Energy Stocks to Watch Amid Rising Oil Prices in 2024
Oil prices may rise as supply disruptions and a shift in market dynamics do wonders for the bottom line. Look for such stocks and find this momentum demonstrated by healthy energy shares like Energy Transfer LP (ET), ChampionX Corporation (CHX), and Secure Energy Services Inc. (SECYF).
Analyst Giovanni Staunovo at UBS commented: “US crude is losing ground, possibly because traders think OPEC can’t hold production cuts given the already-low price thresholds.”.
Overview of Current Oil Market Trends
However, U.S. crude oil prices rose slightly after Hurricane Francine forced a shutdown in oil production from the Gulf of Mexico before its landfall in Louisiana. The Bureau of Safety and Environmental Enforcement reports more than 730,000 barrels per day of Gulf oil production are currently shut-in.
UBS, however, now predicts that prices for oil will go up in the near term as it forecasts Brent crude price to jump higher than $80 a barrel in the near term.
Another front it reduced its global oil demand growth forecast for 2024 to 900,000 barrels a day from 2.1 million barrels a day, citing significant slowdown in Chinese oil consumption growth at 180,000 barrels a day this year.
But OPEC is still more bullish, at least on this chart, about Chinese and global oil consumption growth for the year. OPEC’s outlook continues to reflect belief in the resiliency of oil demand despite all the economic uncertainties and shifts toward alternative fuels.
In light of these trends, let’s look at the fundamentals of three energy stocks that continue to show upward momentum, starting with #3.
Stock #1: Energy Transfer LP (ET)
3 STOCKS TO DOUBLE THIS YEAR
ET has a diversified portfolio of energy assets; it owns more than 130,000 miles of pipelines and related infrastructure. Its core operations include midstream activities associated with natural gas. These operations include the 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 partnership to combine their crude oil and water gathering assets in the Permian Basin. ET would have a 67.5% stake and operate the business.
The business owns over 5,000 miles of pipelines and 11 million barrels of storage capacity, which the merger would serve to strengthen ET’s infrastructure and expand its coverage of markets, boosting growth and operational effectiveness.
On July 15, ET completed its $2.28 billion acquisition of WTG Midstream, adding approximately 6,000 miles of gas-gathering pipelines and eight processing plants to the Permian Basin network. This acquisition is likely to boost distributed cash flow per unit for ET from 2025 onwards and is expected to further propel the growth as well as enhance its competitive position in the energy sector.
ET’s revenues during the fiscal 2024 second quarter ended June 30, 2024, increased 13.1% year over year to $20.73 billion. Its operating income increased 25.2% from the year-ago value to $2.30 billion. Additionally, the company’s adjusted EBITDA increased 20.4% year over year to $3.76 billion.
Net income for the company stood at $1.99 billion, a staggering 61.6% rise from the same period last year. ET’s net income per common unit for the same period surged 40% year-over-year to $0.35.
Street forecasts revenue for the fiscal third quarter ending September 2024 to surge 13.2% year-over-year to $23.47 billion for this company. Likewise, the firm’s EPS for the current quarter is expected to rise 120.3% from the prior year’s period to $0.33.
Shares of ET have increased 7.4 percent over the last six months and 18 percent over the last year as it closed 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.
POWR Ratings for ET show ideal outlook. Overall, the stock carries a B rating that would translate to a Buy in our rating system. POWR Ratings evaluate stocks based on 118 different factors, each weighted differently.
ET earned an A for Growth and a B for Value, Momentum, and Stability. It ranks #2 out of 80 in the Energy – Oil & Gas industry.
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Stock #2: ChampionX Corporation (CHX)
CHX provides chemistry solutions, artificial lift systems, and engineered equipment for oil and gas drilling. The Company’s business segment includes Production Chemical Technologies; Production & Automation Technologies; Drilling Technologies; and Reservoir Chemical Technologies.
On April 2, CHX agreed to be acquired by SLB, the global energy leader in innovation, in a definitive all-stock deal. According to the terms, for every CHX share, shareholders of the company would receive 0.735 shares of SLB common stock. Assimilation into SLB would strengthen CHX’s portfolio, offering the resources and global reach to make a leading investment in delivering energy sustainably.
It acquired RMSpumptools Limited, a designer and manufacturer of advanced mechanical and electrical solutions for artificial lift applications, effective July 9. This strategic acquisition enables CHX to further create value for customers and expand into international markets, including the Middle East, Latin America, and global offshore projects.
Revenue for the fiscal 2024 second quarter that closed June 30 stood at $893.27 million for CHX. Gross profit was at $279.85 million. Net income attributable to CHX stood at $52.57 million, or $0.27 per share. Cash and cash equivalents of CHX were at $393.30 million as of June 30, 2024, compared with $288.56 as of December 31, 2023.
For the fiscal third quarter ending September 2024, revenue for CHX is expected to rise 5.6% year-over-year to $992.61 million. EPS for the current quarter is pegged at $0.51, rising 24.5% from the comparable period last year.
CHX has moved up by 1.6% over the last nine months and closed the last training session at $28.86.
The POWR Ratings for CHX reflect strong fundamentals in the stock. It has an overall grade of B, which translates to a Buy in our proprietary rating system.
CHX has grades of B for Quality, Growth and Momentum. It is ranked #11 out of 50 stocks in the Energy – Services industry.
Apart from the POWR Ratings we mentioned above, we also have CHX ratings for Value, Sentiment, and Stability. Get all CHX ratings here.
Stock #3: Secure Energy Services Inc. (SECYF)
Hailing from Calgary, Canada, SECYF is primarily engaged in waste management and energy infrastructure. Segments of the company include Environmental Waste Management; Energy Infrastructure; and Oilfield Services.
Total revenue at SECYF during the second quarter, ending June 30, 2024, increased 43.2% year-over-year to CAD 2.55 billion ($1.88 billion), of which oil purchase and resale revenue jumped 55% from its year-ago value to CAD 2.22 billion ($1.63 billion).
Additionally, the company’s net income concluded the quarter at CAD 32 million ($23.56 million) and CAD 0.12 per share, respectively. The discretionary free cash flow of the company also increased by 26.2% from the value that prevailed in the year-ago period to CAD 53 million ($39.02 million).
Based on its strong performance in the first six months of 2024, the success of SECYF’s investments in organic growth, and increments added from the acquisition of metal recycling business to its Adjusted EBITDA, the company upwardly revised its full-year 2024 guidance for Adjusted EBITDA to $470 – $490 million from the previous $450 – $465 million.
This stock has been found to be a strong performer. In the last nine months, the shares of SECYF were up 33.9%. Over the last year, the shares are up 43.2% and closed the last trading session at $8.42. Also, this stock is currently trading above its 200-day moving average of $8.07.
SECYF’s robust fundamentals are reflected in its POWR ratings. Overall rating stands at A, equivalent to a Strong Buy in our proprietary rating system.
SECYF has a grade of A for Value. In addition, it has a B grade for Growth and Momentum. Within the Energy – Oil & Gas industry, SECYF has ranked number one out of the 80 stocks.
View here for more ratings of SECYF for Sentiment, Stability, and Quality.
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ET shares closed Friday at $16.16, up $0.16 (+1.00%). Year-to-date, ET has risen 24.58%, compared with a 18.99% one-year gain in the benchmark S&P 500 index.