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3 Broker-Recommended Stocks That Energy Investors Must Track
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The Oil/Energy sector is known for its inherent unpredictability, with frequent price spikes and drops. While significant price fluctuations have always characterized investments in oil and natural gas, uncertainty has increased significantly in recent years, especially following the COVID-19 pandemic.
This volatility reflects substantial uncertainty in demand/supply fundamentals, with companies' profits often hinging on commodity prices. Political headwinds and certain news events can threaten supply or alter anticipated demand, highlighting the need for careful stock selection.
For novice investors, the energy market's volatility can seem risky and anxiety-inducing. However, stocks like Halliburton (HAL - Free Report) , Valero Energy (VLO - Free Report) and Targa Resources (TRGP - Free Report) are worth considering due to brokers' confidence in them. Although these companies currently carry a Zacks Rank #3 (Hold) each, brokers' optimism suggests underlying positive trends.
The volatility and unpredictability of oil prices complicate investment decisions for individuals. With the commodity's future direction uncertain, it may be wise to consider stocks favored by analysts with deep industry knowledge and understanding.
Stocks receiving brokerage upgrades often perform well, while downgrades can signal challenging times ahead. Market reactions typically follow these rating changes. Research indicates that stocks with broker rating upgrades generally outperform those without upgrades and significantly surpass stocks that receive downgrades.
3 Broker-Favored Stocks Worth Keeping on One’s Radar
With the help of the Zacks Stock Screener, we have selected three stocks that have been given a Strong Buy or Buy rating by 75% or more brokers.
Halliburton: Houston, TX-based Halliburton is one of the largest oilfield service providers in the world, offering a variety of equipment, maintenance, and engineering and construction services to the energy, industrial and government sectors. Investors should know that 17 of the 19 brokers providing data to Zacks on Halliburton’s stock have Strong Buy recommendations. The other two ratings are a Buy and a Hold, giving the company an attractive average brokerage recommendation (“ABR”) of 1.16 on a scale of 1 to 5 (Strong Buy to Strong Sell).
Annual earnings are forecast to go up 7.7% this year and rise another 17.2% in 2025 to $3.95 per share. Moreover, sales are projected to climb 5.5% in 2024 and rise another 8.5% in 2025 to $26.3 billion. Finally, the average price target of Zacks is pegged at $48.32 a share, which suggests a 44.5% upside for the HAL stock from the current levels. So far this year, the Halliburton stock has gone down 6.6%, but an upside looks more likely.
Valero Energy: San Antonio, TX-based Valero Energy is the largest independent refiner and marketer of petroleum products in the United States. The company has a refining capacity of 3.1 million barrels per day across 15 refineries located throughout the United States, Canada and the United Kingdom.
Valero’s stock has catapulted more than 23% this year. The company’s performance continues to impress, coming within 10% less than the Zacks average price target of $176.50 at the moment, despite decreasing 11.8% over the past three months.
Even after a decent year-to-date rally, VLO’s stock has only one Strong Sell broker rating, with 12 of them still strongly recommending the company’s shares. After including four hold ratings, Valero’s 1.71 ABR is intriguing. As far as earnings are concerned, VLO’s first-quarter earnings of $3.82 per share beat the consensus estimate of $3.18 a share by 20.1%.
Targa Resources: Targa Resources is a premier energy infrastructure company. A leading provider of integrated midstream services in North America, this Houston, TX-based operator primarily derives its revenues from gathering, compressing, treating, processing and selling natural gas.
An under-the-radar energy stock, TRGP has a very favorable ABR of 1.11. Currently, 16 brokers have a Strong Buy rating on Targa Resources’ stock with two Buy ratings. The company has surged 52.9% year to date.
Total sales are projected to jump 19.2% in 2024 and another 14.7% in 2025 to $22 billion. Earnings are anticipated to rise 44% this year and jump 30.9% in 2025 to $6.90 a share.
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3 Broker-Recommended Stocks That Energy Investors Must Track
The Oil/Energy sector is known for its inherent unpredictability, with frequent price spikes and drops. While significant price fluctuations have always characterized investments in oil and natural gas, uncertainty has increased significantly in recent years, especially following the COVID-19 pandemic.
This volatility reflects substantial uncertainty in demand/supply fundamentals, with companies' profits often hinging on commodity prices. Political headwinds and certain news events can threaten supply or alter anticipated demand, highlighting the need for careful stock selection.
For novice investors, the energy market's volatility can seem risky and anxiety-inducing. However, stocks like Halliburton (HAL - Free Report) , Valero Energy (VLO - Free Report) and Targa Resources (TRGP - Free Report) are worth considering due to brokers' confidence in them. Although these companies currently carry a Zacks Rank #3 (Hold) each, brokers' optimism suggests underlying positive trends.
You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
The Importance of Broker Recommendations
The volatility and unpredictability of oil prices complicate investment decisions for individuals. With the commodity's future direction uncertain, it may be wise to consider stocks favored by analysts with deep industry knowledge and understanding.
Stocks receiving brokerage upgrades often perform well, while downgrades can signal challenging times ahead. Market reactions typically follow these rating changes. Research indicates that stocks with broker rating upgrades generally outperform those without upgrades and significantly surpass stocks that receive downgrades.
3 Broker-Favored Stocks Worth Keeping on One’s Radar
With the help of the Zacks Stock Screener, we have selected three stocks that have been given a Strong Buy or Buy rating by 75% or more brokers.
Halliburton: Houston, TX-based Halliburton is one of the largest oilfield service providers in the world, offering a variety of equipment, maintenance, and engineering and construction services to the energy, industrial and government sectors.
Investors should know that 17 of the 19 brokers providing data to Zacks on Halliburton’s stock have Strong Buy recommendations. The other two ratings are a Buy and a Hold, giving the company an attractive average brokerage recommendation (“ABR”) of 1.16 on a scale of 1 to 5 (Strong Buy to Strong Sell).
Annual earnings are forecast to go up 7.7% this year and rise another 17.2% in 2025 to $3.95 per share. Moreover, sales are projected to climb 5.5% in 2024 and rise another 8.5% in 2025 to $26.3 billion. Finally, the average price target of Zacks is pegged at $48.32 a share, which suggests a 44.5% upside for the HAL stock from the current levels. So far this year, the Halliburton stock has gone down 6.6%, but an upside looks more likely.
Valero Energy: San Antonio, TX-based Valero Energy is the largest independent refiner and marketer of petroleum products in the United States. The company has a refining capacity of 3.1 million barrels per day across 15 refineries located throughout the United States, Canada and the United Kingdom.
Valero’s stock has catapulted more than 23% this year. The company’s performance continues to impress, coming within 10% less than the Zacks average price target of $176.50 at the moment, despite decreasing 11.8% over the past three months.
Even after a decent year-to-date rally, VLO’s stock has only one Strong Sell broker rating, with 12 of them still strongly recommending the company’s shares. After including four hold ratings, Valero’s 1.71 ABR is intriguing. As far as earnings are concerned, VLO’s first-quarter earnings of $3.82 per share beat the consensus estimate of $3.18 a share by 20.1%.
Targa Resources: Targa Resources is a premier energy infrastructure company. A leading provider of integrated midstream services in North America, this Houston, TX-based operator primarily derives its revenues from gathering, compressing, treating, processing and selling natural gas.
An under-the-radar energy stock, TRGP has a very favorable ABR of 1.11. Currently, 16 brokers have a Strong Buy rating on Targa Resources’ stock with two Buy ratings. The company has surged 52.9% year to date.
Total sales are projected to jump 19.2% in 2024 and another 14.7% in 2025 to $22 billion. Earnings are anticipated to rise 44% this year and jump 30.9% in 2025 to $6.90 a share.