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3 Broker-Favored Energy Stocks That Investors Should Monitor
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The Oil/Energy sector is well-known for its inherent unpredictability, with frequent spikes and falls. While significant price fluctuations have always been a hallmark of investments in oil and natural gas, the level of uncertainty has significantly increased in recent years, particularly following the COVID-19 pandemic.
This volatility is a reflection of substantial uncertainty in demand/supply fundamentals, with the companies’ profits often depending on commodity prices. Headwinds across the political spectrum and certain news headlines or events can always threaten supply or change anticipated demand. All these call for an increased focus on stock selection.
For novice investors, the volatility of the energy market can make investing seem risky and anxiety-inducing. However, stocks like SLB (SLB - 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), brokers' optimism suggests underlying positive trends.
The volatility and uncertainty of oil prices make investment decisions difficult for individuals. With the future direction of the commodity’s movement being anybody's guess, it might be wise to go ahead with stocks preferred by analysts who have deep fundamental knowledge and understanding of the industry and its companies.
Stocks with brokerage upgrades are often in for a good day and probably more. A downgrade may indicate rough days ahead. Whatever the movement, the market tends to react to it. Also, research shows that stocks with broker rating upgrades outperform those that aren't upgraded, and they almost certainly record better results than stocks that get downgraded.
Brokers Love These 3 Energy Stocks
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.
SLB: Houston, TX-based SLB 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 18 of the 21 brokers providing data to Zacks on SLB’s stock have Strong Buy recommendations. The other three ratings are two Buys and a Hold, giving the company an attractive average brokerage recommendation (“ABR”) of 1.19 on a scale of 1 to 5 (Strong Buy to Strong Sell).
Annual earnings are forecast to go up 17.1% this year and rise another 17.4% in 2025 to $4.10 per share. Moreover, sales are projected to climb 11.3% in 2024 and rise another 16.4% in 2025 to $42.9 billion. Finally, the average price target of Zacks is pegged at $65.50 a share, which suggests a 48.9% upside for the SLB stock from the current levels. So far this year, SLB shares are down 15.4%, 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 3.2 million barrels per day across 15 refineries located primarily in the United States, Canada and the United Kingdom.
Valero’s stock is up almost 13% this year. The company’s performance continues to impress, coming within 17% less than the Zacks average price target of $171.35 at the moment, despite decreasing 5.6% over the past three months.
Even after a decent year-to-date rally, VLO’s stock has only one Strong Sell broker rating, with 14 of them still strongly recommending the company’s shares. After including three hold ratings, Valero’s 1.56 ABR is intriguing. As far as earnings are concerned, VLO’s second-quarter earnings of $2.71 per share beat the consensus estimate of $2.61 a share by 3.8%.
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, 17 brokers have a Strong Buy rating on Targa Resources’ stock with two Buy ratings. The company has surged 69.1% year to date.
Total sales are projected to jump 12.7% in 2024 and another 15.2% in 2025 to $20.8 billion. Earnings are anticipated to rise 60.7% this year and jump 25.6% in 2025 to $7.38 a share.
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3 Broker-Favored Energy Stocks That Investors Should Monitor
The Oil/Energy sector is well-known for its inherent unpredictability, with frequent spikes and falls. While significant price fluctuations have always been a hallmark of investments in oil and natural gas, the level of uncertainty has significantly increased in recent years, particularly following the COVID-19 pandemic.
This volatility is a reflection of substantial uncertainty in demand/supply fundamentals, with the companies’ profits often depending on commodity prices. Headwinds across the political spectrum and certain news headlines or events can always threaten supply or change anticipated demand. All these call for an increased focus on stock selection.
For novice investors, the volatility of the energy market can make investing seem risky and anxiety-inducing. However, stocks like SLB (SLB - 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), brokers' optimism suggests underlying positive trends.
You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Why is it Desirable to Follow Expert Opinion?
The volatility and uncertainty of oil prices make investment decisions difficult for individuals. With the future direction of the commodity’s movement being anybody's guess, it might be wise to go ahead with stocks preferred by analysts who have deep fundamental knowledge and understanding of the industry and its companies.
Stocks with brokerage upgrades are often in for a good day and probably more. A downgrade may indicate rough days ahead. Whatever the movement, the market tends to react to it. Also, research shows that stocks with broker rating upgrades outperform those that aren't upgraded, and they almost certainly record better results than stocks that get downgraded.
Brokers Love These 3 Energy Stocks
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.
SLB: Houston, TX-based SLB 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 18 of the 21 brokers providing data to Zacks on SLB’s stock have Strong Buy recommendations. The other three ratings are two Buys and a Hold, giving the company an attractive average brokerage recommendation (“ABR”) of 1.19 on a scale of 1 to 5 (Strong Buy to Strong Sell).
Annual earnings are forecast to go up 17.1% this year and rise another 17.4% in 2025 to $4.10 per share. Moreover, sales are projected to climb 11.3% in 2024 and rise another 16.4% in 2025 to $42.9 billion. Finally, the average price target of Zacks is pegged at $65.50 a share, which suggests a 48.9% upside for the SLB stock from the current levels. So far this year, SLB shares are down 15.4%, 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 3.2 million barrels per day across 15 refineries located primarily in the United States, Canada and the United Kingdom.
Valero’s stock is up almost 13% this year. The company’s performance continues to impress, coming within 17% less than the Zacks average price target of $171.35 at the moment, despite decreasing 5.6% over the past three months.
Even after a decent year-to-date rally, VLO’s stock has only one Strong Sell broker rating, with 14 of them still strongly recommending the company’s shares. After including three hold ratings, Valero’s 1.56 ABR is intriguing. As far as earnings are concerned, VLO’s second-quarter earnings of $2.71 per share beat the consensus estimate of $2.61 a share by 3.8%.
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, 17 brokers have a Strong Buy rating on Targa Resources’ stock with two Buy ratings. The company has surged 69.1% year to date.
Total sales are projected to jump 12.7% in 2024 and another 15.2% in 2025 to $20.8 billion. Earnings are anticipated to rise 60.7% this year and jump 25.6% in 2025 to $7.38 a share.