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4 Oil Stocks to Take Care of Your Portfolio in 2021
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As we step into 2021, a million-dollar question bothers investors — “Can beaten-down oil stocks rebound?” There is every possibility for the same — as suggested by most of the analysts — since coronavirus vaccines are being rolled out in some countries, thereby boosting hopes for global fuel demand recovery. Oil companies are optimistic and are returning to shale plays, with the continual rise in rig count, to capitalize on the gradually improving crude price.
Fuel Demand to Bounce Back
The rolling out of coronavirus vaccines and recent signing of a massive pandemic relief package have bolstered hopes that fuel demand will bounce back sharply in 2021. In its short-term energy outlook, the U.S. Energy Information Administration (“EIA”) stated that in 2021, global consumption of liquid fuels will average 98.2 million barrel per day (Bbl/D). This will mark a notable improvement from EIA’s forecast of 92.4 million Bbl/D of liquid fuel consumption in 2020.
Thus, it has become obvious that EIA is expecting global consumption of liquid fuels in 2021 to get closer to the pre-pandemic mark of 101.2 million Bbl/D in 2019. With significant fuel demand recovery ahead, the price of West Texas Intermediate (WTI) crude is likely to recover further in 2021. WTI crude price, currently hovering around $48 per barrel, has already witnessed a significant recovery over the past several months since the commodity price slipped into negative territory in April.
Oil Players to Shine Again
Since there is every possibility that the crude pricing scenario will get healthier in 2021, oil exploration and production companies will shine again. Thus, oil companies will be in a better position to reward shareholders in 2021, considering higher commodity price and strict cost-cutting measures that have already been taken to combat the pandemic. Hence, it can be said that the excess cash flows that the companies are likely to generate in 2021 can be utilized in reducing the debt load, paying handsome dividends and repurchasing beaten-down stocks.
With the possibilities of positive developments in place, it is time for investors to take care of portfolios with oil stocks. We have employed our proprietary stock screener to zero down four oil stocks that have presence in prolific shale plays in the United States and hence are well poised to gain. Three of the stocks sport a Zacks Rank #1 (Strong Buy), while another one carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
4 Stocks to Buy
Diamondback Energy Inc. (FANG - Free Report) — headquartered in Midland, TX — is a leading pure play Permian operator. The #1 Ranked stock has witnessed upward earnings estimate revisions for 2021 in the past 30 days. In 2021, the upstream firm is likely to see earnings growth of 57.7%.
Headquartered in Denver, CO, HighPoint Resources Corporation is a leading upstream energy firm with strong presence in Denver-Julesburg Basin of Colorado. The Zacks #1 Ranked stock is likely to come up with earnings growth of 12.3% in 2021.
Northern Oil and Gas, Inc. (NOG - Free Report) — based in Minnetonka, MN — has a strong presence in Bakken and Three Forks formations of the Williston Basin. The stock, sporting a Zacks Rank of 1, has seen upward earnings estimate revisions for 2021 in the past 30 days.
Headquartered in Dallas, TX, Matador Resources Company (MTDR - Free Report) has strong footprint in liquid-rich Delaware Basin’s Wolfcamp and Bone Spring plays. The Zacks Rank #2 stock is likely to see earnings growth of 180.9% in 2021.
Zacks Top 10 Stocks for 2021
In addition to the stocks discussed above, would you like to know about our 10 top tickers for the entirety of 2021?
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4 Oil Stocks to Take Care of Your Portfolio in 2021
As we step into 2021, a million-dollar question bothers investors — “Can beaten-down oil stocks rebound?” There is every possibility for the same — as suggested by most of the analysts — since coronavirus vaccines are being rolled out in some countries, thereby boosting hopes for global fuel demand recovery. Oil companies are optimistic and are returning to shale plays, with the continual rise in rig count, to capitalize on the gradually improving crude price.
Fuel Demand to Bounce Back
The rolling out of coronavirus vaccines and recent signing of a massive pandemic relief package have bolstered hopes that fuel demand will bounce back sharply in 2021. In its short-term energy outlook, the U.S. Energy Information Administration (“EIA”) stated that in 2021, global consumption of liquid fuels will average 98.2 million barrel per day (Bbl/D). This will mark a notable improvement from EIA’s forecast of 92.4 million Bbl/D of liquid fuel consumption in 2020.
Thus, it has become obvious that EIA is expecting global consumption of liquid fuels in 2021 to get closer to the pre-pandemic mark of 101.2 million Bbl/D in 2019. With significant fuel demand recovery ahead, the price of West Texas Intermediate (WTI) crude is likely to recover further in 2021. WTI crude price, currently hovering around $48 per barrel, has already witnessed a significant recovery over the past several months since the commodity price slipped into negative territory in April.
Oil Players to Shine Again
Since there is every possibility that the crude pricing scenario will get healthier in 2021, oil exploration and production companies will shine again. Thus, oil companies will be in a better position to reward shareholders in 2021, considering higher commodity price and strict cost-cutting measures that have already been taken to combat the pandemic. Hence, it can be said that the excess cash flows that the companies are likely to generate in 2021 can be utilized in reducing the debt load, paying handsome dividends and repurchasing beaten-down stocks.
With the possibilities of positive developments in place, it is time for investors to take care of portfolios with oil stocks. We have employed our proprietary stock screener to zero down four oil stocks that have presence in prolific shale plays in the United States and hence are well poised to gain. Three of the stocks sport a Zacks Rank #1 (Strong Buy), while another one carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
4 Stocks to Buy
Diamondback Energy Inc. (FANG - Free Report) — headquartered in Midland, TX — is a leading pure play Permian operator. The #1 Ranked stock has witnessed upward earnings estimate revisions for 2021 in the past 30 days. In 2021, the upstream firm is likely to see earnings growth of 57.7%.
Headquartered in Denver, CO, HighPoint Resources Corporation is a leading upstream energy firm with strong presence in Denver-Julesburg Basin of Colorado. The Zacks #1 Ranked stock is likely to come up with earnings growth of 12.3% in 2021.
Northern Oil and Gas, Inc. (NOG - Free Report) — based in Minnetonka, MN — has a strong presence in Bakken and Three Forks formations of the Williston Basin. The stock, sporting a Zacks Rank of 1, has seen upward earnings estimate revisions for 2021 in the past 30 days.
Headquartered in Dallas, TX, Matador Resources Company (MTDR - Free Report) has strong footprint in liquid-rich Delaware Basin’s Wolfcamp and Bone Spring plays. The Zacks Rank #2 stock is likely to see earnings growth of 180.9% in 2021.
Zacks Top 10 Stocks for 2021
In addition to the stocks discussed above, would you like to know about our 10 top tickers for the entirety of 2021?
These 10 are painstakingly hand-picked from over 4,000 companies covered by the Zacks Rank. They are our primary picks to buy and hold. Start Your Access to the New Zacks Top 10 Stocks >>