雅虎香港財經 3 Oil & Gas Stocks to Buy Now: June 2024
Oil and gas stocks have gotten left out of the party in 2024.
The price of crude oil dipped below $80 per barrel in April and has not risen much past that mark as investors fret about a potential economic slowdown. Natural gas has rebounded a bit recently, but it is still below $3 per British thermal unit (BTU), compared to a peak price of around $10 back in 2022.
On the one hand, inflation is coming down, and that could pave the way for interest rate cuts and boost economic activity. But some investors are clearly nervous that a bigger economic slowdown could ensue, which would slam demand for energy products.
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As a result, oil and gas stocks have seriously underperformed the market this year. The macroeconomic concerns are real. But these three energy stocks are poised to profit — and pay outsized dividends — regardless of these concerns. These are the oil and gas stocks to buy now.
Canadian Natural Resources (CNQ)
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Canadian Natural Resources (NYSE:CNQ) is one of Canada’s large energy companies. It has a large position in the Alberta oil sands, which are one of the more attractive asset categories in the energy sector today.
Specifically, oil sands are a great asset given current political and economic conditions. Oil sand production is more akin to hard rock mining rather than an oil well. This means that oil sands have a long production life with minimal production declines, as opposed to shale and fracking, for which production rates drop off virtually overnight.
In a world where political regulations and environmentalists have made it more difficult to open new oil fields, existing assets in oil sands enjoy a much better regulatory environment.
It’s not just that, either. Oil sands have high upfront costs to built, but they are cheap to keep running once they are operational. Last quarter, for example, Canadian Natural had a netback (the profit per unit of oil brought to market after all costs) of $37 CAD per barrel.
This fat profit margin shows how well Canadian Natural is situated for the current oil and gas market. If oil skyrockets into the triple digits, that’s all the better. But it makes plenty of money on its massive oil reserves regardless of near-term price volatility.
Exxon Mobil (XOM)
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Exxon Mobil (NYSE:XOM) is one of the world’s most powerful energy companies and is another of the oil and gas stocks to buy now. It has operations spanning nearly all parts of the globe, and it has a robust integrated business covering oil and gas production, refining, chemicals, distribution and even renewables.
Exxon Mobil is known for its shrewd capital allocation. Management runs the company with a long-term time horizon and is often willing to invest counter to the economic cycle to deliver maximum shareholder returns.
A recent example is Exxon’s gigantic investment in Guyana, made during the 2010s when the price of oil was in the dumps. Guyana is now the world’s fastest-growing economy, and Exxon Mobil is reaping the benefits of this forward-thinking investment.
XOM stock is the perfect investment for an energy pick where investors don’t need to fret too much about the day-to-day swings in oil and gas prices. The company’s robust and diversified mix of assets gives it plenty of insulation from near-term volatility. And its exceptionally strong balance sheet ensures that the dividends will keep flowing for decades to come.
Ecopetrol (EC)
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Ecopetrol (NYSE:EC) is the Republic of Colombia’s state-operated oil company. The Colombian government controls 88% of the firm, with outside shareholders owning the other 12%.
That has created a favorable dynamic for shareholders. The Colombian government has historically encouraged Ecopetrol to pay high dividends that go, in large part, to fund its national treasury. EC stockholders, however, get to enjoy those bountiful yields as well, making EC a stock to buy.
In 2023, Ecopetrol paid nearly $3 per share in dividends, resulting in a more than 25% dividend yield on the company’s average share price during the year.
Ecopetrol pays a variable dividend based on its annual profitability. Profits are down this year with the dip in oil prices. Still, the company has dialed up another $1.62 in dividends for its shareholders in 2024, amounting to a 13.9% dividend yield on today’s stock price.
While the exact dividend will fluctuate from year to year, Ecopetrol can pay out a huge income stream due to its high-quality assets. It is a low-cost oil producer with a dominant market position in Colombia. In addition to its upstream oil production, it also controls 100% of Colombia’s refining capacity along with substantial pipelines, the electric grid, toll roads and renewable energy assets.
EC stock is currently trading at less than six times forward earnings. This makes for an attractive entry point on this bargain high-yielding oil and gas stock.
On the date of publication, Ian Bezek held a long position in CNQ, EC and XOM stock. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
Ian Bezek has written more than 1,000 articles for InvestorPlace.com and Seeking Alpha. He also worked as a Junior Analyst for Kerrisdale Capital, a $300 million New York City-based hedge fund. You can reach him on Twitter at @irbezek.
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