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Are You a Momentum Investor? Bet on These 3 Energy Stocks
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The energy sector has undergone a notable rebound and is currently outperforming the Zacks S&P 500 composite. In fact, the Energy Select Sector SPDR Fund (XLE - Free Report) , which tracks the performance of companies in the energy sector, is trading close to its 52-week high mark. This positive momentum is expected to continue, according to analysts, as both upstream and downstream businesses remain lucrative.
Overall Energy Business Rosy
This year, there may be a potential problem or bottleneck with the availability of gasoline before summer, when car travel typically increases. Per data from the U.S. Energy Information Administration, this week motor gasoline inventories fell 4.3 million barrels from the previous week, approximately 3% lower than the five-year average for this time of year. The latest data provided by EIA is for the week ended Mar 29, 2024.
The decrease in inventories has resulted in a rise in gasoline prices, with the current national average for regular gasoline, as measured by AAA, standing at $3.598 per gallon. This price is higher than the figures from a year ago and from last week. The surge in gasoline demand and the subsequent price increase are advantageous for retailers of gasoline and refiners in the United States.
Energy is Now the New Momentum Trade
Similarly, exploration and production companies are experiencing favorable conditions as the West Texas Intermediate crude price trades above the $85-per-barrel mark, attributed to heightened tensions in the Middle East and tight supply in the global market. These developments are already evident in the performance of the broader Zacks Oil - Energy sector, which has outpaced the Zacks S&P 500 composite over the past three months.
Over the past three months, the broader Zacks Oil - Energy sector has gained 14.7%, surpassing the 9.2% improvement of the Zacks S&P 500 composite. This momentum is expected to continue as energy demand is likely to remain robust ahead of the summer driving season amid tightening global supplies.
Being a well-known retailer of gasoline and convenience merchandise, Murphy USA is well-positioned to capitalize on the growing gasoline demand. Utilizing its huge network of retail gasoline and convenience stores in 27 states, the company is able to provide services to 2 million customers on a daily basis. Over the past seven days, the stock has witnessed upward earnings estimate revisions for this year.
Another stock that can gain from the handsome gasoline demand is Valero Energy since it is a best-in-class oil refiner involved in the production of fuels and products that can meet the requirements of modern life. Its refineries are located across the United States, Canada and the U.K. A total of 15 petroleum refineries, wherein Valero has ownership interests, have a combined throughput capacity of 3.2 million barrels per day.
SM Energy is a well-known oil and natural gas exploration and production company. It is well-placed to capitalize on the promising oil price as it has a strong footprint in the prolific Midland Basin. Over the past seven days, the stock has witnessed upward earnings estimate revisions for this year.
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Are You a Momentum Investor? Bet on These 3 Energy Stocks
The energy sector has undergone a notable rebound and is currently outperforming the Zacks S&P 500 composite. In fact, the Energy Select Sector SPDR Fund (XLE - Free Report) , which tracks the performance of companies in the energy sector, is trading close to its 52-week high mark. This positive momentum is expected to continue, according to analysts, as both upstream and downstream businesses remain lucrative.
Overall Energy Business Rosy
This year, there may be a potential problem or bottleneck with the availability of gasoline before summer, when car travel typically increases. Per data from the U.S. Energy Information Administration, this week motor gasoline inventories fell 4.3 million barrels from the previous week, approximately 3% lower than the five-year average for this time of year. The latest data provided by EIA is for the week ended Mar 29, 2024.
The decrease in inventories has resulted in a rise in gasoline prices, with the current national average for regular gasoline, as measured by AAA, standing at $3.598 per gallon. This price is higher than the figures from a year ago and from last week. The surge in gasoline demand and the subsequent price increase are advantageous for retailers of gasoline and refiners in the United States.
Energy is Now the New Momentum Trade
Similarly, exploration and production companies are experiencing favorable conditions as the West Texas Intermediate crude price trades above the $85-per-barrel mark, attributed to heightened tensions in the Middle East and tight supply in the global market. These developments are already evident in the performance of the broader Zacks Oil - Energy sector, which has outpaced the Zacks S&P 500 composite over the past three months.
Over the past three months, the broader Zacks Oil - Energy sector has gained 14.7%, surpassing the 9.2% improvement of the Zacks S&P 500 composite. This momentum is expected to continue as energy demand is likely to remain robust ahead of the summer driving season amid tightening global supplies.
Our Top Picks
At this stage, it will be prudent to invest in momentum energy stocks. Using our unique stock screener, we've identified three stocks - Murphy USA Inc. (MUSA - Free Report) , SM Energy Company (SM - Free Report) and Valero Energy Corporation (VLO - Free Report) - that have Momentum Score of A. While Valero Energy carries a Zacks Rank #2 (Buy), Murphy USA and SM Energy sport a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Being a well-known retailer of gasoline and convenience merchandise, Murphy USA is well-positioned to capitalize on the growing gasoline demand. Utilizing its huge network of retail gasoline and convenience stores in 27 states, the company is able to provide services to 2 million customers on a daily basis. Over the past seven days, the stock has witnessed upward earnings estimate revisions for this year.
Another stock that can gain from the handsome gasoline demand is Valero Energy since it is a best-in-class oil refiner involved in the production of fuels and products that can meet the requirements of modern life. Its refineries are located across the United States, Canada and the U.K. A total of 15 petroleum refineries, wherein Valero has ownership interests, have a combined throughput capacity of 3.2 million barrels per day.
SM Energy is a well-known oil and natural gas exploration and production company. It is well-placed to capitalize on the promising oil price as it has a strong footprint in the prolific Midland Basin. Over the past seven days, the stock has witnessed upward earnings estimate revisions for this year.