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5 Top Energy Growth Stocks That You Need to Buy for 2024
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In 2023, Wall Street has seen a significant jump, fueled by a continuous decline in inflation and a simultaneous reduction in both the size and frequency of interest rate hikes by the Federal Reserve. Reflecting this trend, the S&P 500 has gone up by 24.5% year to date, nearing its all-time highs. Despite the generally positive market outlook, the Oil/Energy sector has experienced a total return of (2.5%) so far this year.
Meanwhile, there are investors who see crude’s current slump as a temporary event and decide to build or increase their position in oil-related companies. For them, this seems to be the perfect time to indulge in growth stocks to make sure your portfolio is perfectly oiled up!
While the S&P 500 Index has been on a tear, it has been a wild ride for the energy market in 2023, setting pulses racing of even the steadiest investors.
At around $74 per barrel, crude prices are some 20% lower than the 2023 highs reached in late September, primarily due to global economic uncertainties, expanding production capabilities outside OPEC, and abundant inventories. China's economic struggles further dampen global demand forecasts. Meanwhile, natural gas is trading below $3 on high production and predictions of insipid weather-related demand.
Robust Fundamentals to Power the Sector in 2024
Despite the recent challenges, the oil-producing group OPEC remains optimistic about the future of the market. In its December Oil Market Report, the organization highlighted the strong demand for crude oil, expecting it to be higher than the increase in oil supply from non-OPEC sources. This positive view persists even though oil prices recently went down, a drop that OPEC blames on speculators and their "exaggerated concerns."
OPEC's confidence is backed by the overall global economy. Notwithstanding certain issues, it notes that the economy grew more than expected in the first three quarters of 2023. The prospect of accommodative monetary policies and improved geopolitical conditions adds to the positive outlook. OPEC points out key factors driving demand, such as strong global GDP growth, better economic conditions in China, and growth in OECD Americas.
For natural gas, signs of curtailment in domestic volumes and a stable demand catalyst in the form of continued strong LNG deliveries should support the fuel next year.
Beware of Volatility
The Energy sector is renowned for its inherent volatility, characterized by abrupt positive upswings and crashes. While dramatic price fluctuations have long been a hallmark of oil and natural gas investments, the level of uncertainty has significantly escalated in recent years, particularly in the aftermath of the COVID-19 pandemic. The unpredictability of stocks, influenced by sudden market shifts, underscores the risk in stock picking.
Confused? Bank on a Proper Strategy
The uncertainty of oil/natural gas prices means that the future direction of their movement is anybody's guess. However, if we pick an investing strategy according to our requirements and risk appetite, it will definitely lower the possibility of losses. Growth investing is one of the most popular stock selection techniques.
Growth investing, as the name suggests, offers a higher growth potential to investors compared to other stocks in the same category. A feature of growth stocks is that they prefer to utilize the retained earnings in capital growth projects to churn out new products and develop new technology rather than making a dividend payment.
Here Are the Stocks
Now, selecting the right growth stock among the existing choices can really be a challenging task. Finding the correct growth stock for your portfolio is made easy by our new style score system.
In particular, our Growth Style Score condenses all the essential metrics from a company’s financial statements to get a true sense of the quality and sustainability of its growth. Our research shows that stocks with a Growth Style Score of ‘A’ or ‘B’ when combined with a Zacks Rank #1 (Strong Buy) or 2 (Buy) offer the best investment opportunities in the growth investing space. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Sunoco LP.: Headquartered in Dallas, TX, SUN participates in the transportation and supply phase of the U.S. petroleum market across a number of states. It also focuses on motor fuel distribution to convenience stores, independent dealers and commercial customers. The Zacks #1 Ranked firm, which has a Value Score of B, pays out 84.20 cents quarterly distribution ($3.368 per unit annually), which gives it a 5.4% yield at the current unit price.
Over the past 60 days, Sunoco saw the Zacks Consensus Estimate for 2023 move up 21.8%. The 2023 Zacks Consensus Estimate for SUN indicates 10.9% year-over-year earnings per share growth. It has a trailing four-quarter earnings surprise of roughly 28.3%, on average.
CrossAmerica Partners LP.: Headquartered in Allentown, PA, wholesale distributor of motor fuels CrossAmerica Partners’ variable rate margins helped it offset the loss in volumes during the pandemic. Further, CAPL’s recent acquisitions of retail and wholesale assets provide it with a wider reach and scale. The stock — with a Growth Score of B — has a Zacks Rank of 1.
Over the past 60 days, CrossAmerica Partners saw the Zacks Consensus Estimate for 2023 move up 25%. The firm, which pays out 52.50 cents quarterly distribution to yield more than 9%, beat the Zacks Consensus Estimate for earnings thrice in the trailing four quarters and missed in the other.
Liberty Energy: Liberty Energy is a North American provider of hydraulic fracturing services to upstream energy operators. The company’s multi-basin presence offers attractive upside opportunity compared to most of its peers. Liberty's purchase of Schlumberger assets has significantly boosted its fleet size. Apart from revenues and cost synergies, the transaction broadened LBRT’s geographic footprint.
The 2023 Zacks Consensus Estimate for the Zacks #2 Ranked company indicates 52.1% year-over-year earnings per share growth. Liberty Energy — with a Growth Score of A — beat the Zacks Consensus Estimate for earnings in three of the last four quarters and missed in the other. It has a trailing four-quarter earnings surprise of 9.9%, on average.
SLB: With operations spread across more than 100 countries, SLB provides the most comprehensive range of oilfield services and products to the explorers and producers of hydrocarbons. The company, founded in 1926, also supports the explorers to construct oil and gas wells and produce optimum volumes of commodities from the existing wells.
SLB’s expected EPS growth rate for three to five years is currently 24.8%, which compares favorably with the industry's growth rate of 19.5%. Notably, the 2023 Zacks Consensus Estimate for the company indicates 36.2% year-over-year earnings per share growth. The #2 Ranked SLB has a Growth Score of B.
Nine Energy Service: Nine Energy Service specializes in offering completion solutions to energy firms within North America and abroad. With a footprint in every major North American basin, the company has a diverse, blue-chip customer base with minimal concentration. NINE is distinguished by its years of experience, strong dedication to delivering intelligent, tailored solutions, and the use of world-class resources to enhance efficiencies.
Over the past 60 days, NINE saw the Zacks Consensus Estimate for 2023 move up 9%. The #2 Ranked oilfield service provider has a Growth Score of B. Nine Energy Services’ current market cap is roughly $102.8 million.
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5 Top Energy Growth Stocks That You Need to Buy for 2024
In 2023, Wall Street has seen a significant jump, fueled by a continuous decline in inflation and a simultaneous reduction in both the size and frequency of interest rate hikes by the Federal Reserve. Reflecting this trend, the S&P 500 has gone up by 24.5% year to date, nearing its all-time highs. Despite the generally positive market outlook, the Oil/Energy sector has experienced a total return of (2.5%) so far this year.
Meanwhile, there are investors who see crude’s current slump as a temporary event and decide to build or increase their position in oil-related companies. For them, this seems to be the perfect time to indulge in growth stocks to make sure your portfolio is perfectly oiled up!
We would like to zoom in on five companies that we believe fit the bill. These are Sunoco LP (SUN - Free Report) , CrossAmerica Partners LP (CAPL - Free Report) Liberty Energy (LBRT - Free Report) , SLB (SLB - Free Report) and Nine Energy Service (NINE - Free Report) .
Energy: One of the Few Sectors Lagging
While the S&P 500 Index has been on a tear, it has been a wild ride for the energy market in 2023, setting pulses racing of even the steadiest investors.
At around $74 per barrel, crude prices are some 20% lower than the 2023 highs reached in late September, primarily due to global economic uncertainties, expanding production capabilities outside OPEC, and abundant inventories. China's economic struggles further dampen global demand forecasts. Meanwhile, natural gas is trading below $3 on high production and predictions of insipid weather-related demand.
Robust Fundamentals to Power the Sector in 2024
Despite the recent challenges, the oil-producing group OPEC remains optimistic about the future of the market. In its December Oil Market Report, the organization highlighted the strong demand for crude oil, expecting it to be higher than the increase in oil supply from non-OPEC sources. This positive view persists even though oil prices recently went down, a drop that OPEC blames on speculators and their "exaggerated concerns."
OPEC's confidence is backed by the overall global economy. Notwithstanding certain issues, it notes that the economy grew more than expected in the first three quarters of 2023. The prospect of accommodative monetary policies and improved geopolitical conditions adds to the positive outlook. OPEC points out key factors driving demand, such as strong global GDP growth, better economic conditions in China, and growth in OECD Americas.
For natural gas, signs of curtailment in domestic volumes and a stable demand catalyst in the form of continued strong LNG deliveries should support the fuel next year.
Beware of Volatility
The Energy sector is renowned for its inherent volatility, characterized by abrupt positive upswings and crashes. While dramatic price fluctuations have long been a hallmark of oil and natural gas investments, the level of uncertainty has significantly escalated in recent years, particularly in the aftermath of the COVID-19 pandemic. The unpredictability of stocks, influenced by sudden market shifts, underscores the risk in stock picking.
Confused? Bank on a Proper Strategy
The uncertainty of oil/natural gas prices means that the future direction of their movement is anybody's guess. However, if we pick an investing strategy according to our requirements and risk appetite, it will definitely lower the possibility of losses. Growth investing is one of the most popular stock selection techniques.
Growth investing, as the name suggests, offers a higher growth potential to investors compared to other stocks in the same category. A feature of growth stocks is that they prefer to utilize the retained earnings in capital growth projects to churn out new products and develop new technology rather than making a dividend payment.
Here Are the Stocks
Now, selecting the right growth stock among the existing choices can really be a challenging task. Finding the correct growth stock for your portfolio is made easy by our new style score system.
In particular, our Growth Style Score condenses all the essential metrics from a company’s financial statements to get a true sense of the quality and sustainability of its growth. Our research shows that stocks with a Growth Style Score of ‘A’ or ‘B’ when combined with a Zacks Rank #1 (Strong Buy) or 2 (Buy) offer the best investment opportunities in the growth investing space. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Sunoco LP.: Headquartered in Dallas, TX, SUN participates in the transportation and supply phase of the U.S. petroleum market across a number of states. It also focuses on motor fuel distribution to convenience stores, independent dealers and commercial customers. The Zacks #1 Ranked firm, which has a Value Score of B, pays out 84.20 cents quarterly distribution ($3.368 per unit annually), which gives it a 5.4% yield at the current unit price.
Over the past 60 days, Sunoco saw the Zacks Consensus Estimate for 2023 move up 21.8%. The 2023 Zacks Consensus Estimate for SUN indicates 10.9% year-over-year earnings per share growth. It has a trailing four-quarter earnings surprise of roughly 28.3%, on average.
CrossAmerica Partners LP.: Headquartered in Allentown, PA, wholesale distributor of motor fuels CrossAmerica Partners’ variable rate margins helped it offset the loss in volumes during the pandemic. Further, CAPL’s recent acquisitions of retail and wholesale assets provide it with a wider reach and scale. The stock — with a Growth Score of B — has a Zacks Rank of 1.
Over the past 60 days, CrossAmerica Partners saw the Zacks Consensus Estimate for 2023 move up 25%. The firm, which pays out 52.50 cents quarterly distribution to yield more than 9%, beat the Zacks Consensus Estimate for earnings thrice in the trailing four quarters and missed in the other.
Liberty Energy: Liberty Energy is a North American provider of hydraulic fracturing services to upstream energy operators. The company’s multi-basin presence offers attractive upside opportunity compared to most of its peers. Liberty's purchase of Schlumberger assets has significantly boosted its fleet size. Apart from revenues and cost synergies, the transaction broadened LBRT’s geographic footprint.
The 2023 Zacks Consensus Estimate for the Zacks #2 Ranked company indicates 52.1% year-over-year earnings per share growth. Liberty Energy — with a Growth Score of A — beat the Zacks Consensus Estimate for earnings in three of the last four quarters and missed in the other. It has a trailing four-quarter earnings surprise of 9.9%, on average.
SLB: With operations spread across more than 100 countries, SLB provides the most comprehensive range of oilfield services and products to the explorers and producers of hydrocarbons. The company, founded in 1926, also supports the explorers to construct oil and gas wells and produce optimum volumes of commodities from the existing wells.
SLB’s expected EPS growth rate for three to five years is currently 24.8%, which compares favorably with the industry's growth rate of 19.5%. Notably, the 2023 Zacks Consensus Estimate for the company indicates 36.2% year-over-year earnings per share growth. The #2 Ranked SLB has a Growth Score of B.
Nine Energy Service: Nine Energy Service specializes in offering completion solutions to energy firms within North America and abroad. With a footprint in every major North American basin, the company has a diverse, blue-chip customer base with minimal concentration. NINE is distinguished by its years of experience, strong dedication to delivering intelligent, tailored solutions, and the use of world-class resources to enhance efficiencies.
Over the past 60 days, NINE saw the Zacks Consensus Estimate for 2023 move up 9%. The #2 Ranked oilfield service provider has a Growth Score of B. Nine Energy Services’ current market cap is roughly $102.8 million.