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4 Energy Stocks Poised to Outperform Their Market in 2024
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The oil and gas industry is poised for a strong beginning in 2024, primarily attributed to its robust financial position and elevated oil prices. The industry’s resilience is expected to provide financial backing for investments and dividends. This will support its disciplined capital programs and a strategic focus on shareholder interests.
Maintaining a secure balance sheet and holding substantial cash reserves is imperative, especially in the cyclical Oil/Energy sector. A strong financial foundation not only enhances a company’s valuation but also serves as a protective buffer during downturns in the industry. Also, regular dividends can be a sign of a company's strong financial health and its ability to generate cash.
Amid dynamic market shifts and technological advancements, investors with foresight are closely monitoring stocks within the energy sector that have the potential to outperform the market in 2024.
Here are four energy stocks, chosen based on their innovation, market position and financial health, which show promising prospects. All four companies mentioned below currently carry a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Liberty Energy (LBRT - Free Report) offers hydraulic fracturing services to onshore upstream energy companies across multiple basins in North America. The company’s total assets grew from $2.6 billion as of Dec 31, 2022, to $3 billion as of Sep 30, 2023. This demonstrates a robust balance sheet and efficient asset management.
Liberty is in a commendable financial position. As of Sep 30, 2023, the company had approximately $27 million in cash and cash equivalents, supported by its revolving credit facility. Notably, Liberty’s debt-to-capitalization ratio is a mere 11.1%, in stark contrast to many peers grappling with significantly higher debt levels, constituting 50% of their total capital structures.
Liberty has experienced a substantial dividend growth of 70% over the past year. This suggests that the company is actively increasing its dividend payments, which can be attractive to income-seeking investors. LBRT offers an annual dividend of 28 cents per share.
Chevron Corporation (CVX - Free Report) is one of the largest publicly traded oil and gas companies operating across diverse regions worldwide. This San Ramon, CA-based company is fully integrated, engaging in every facet of the energy sector, encompassing oil production, refining and marketing.
CVX’s robust financial position is evident in its clean balance sheet, characterized by a relatively low debt-to-equity ratio. As of Sep 30, Chevron has $5.9 billion in cash and cash equivalents, with a total debt of $20.6 billion and a conservative debt-to-total capitalization ratio of 11%. This financial strength has earned Chevron a high investment-grade rating of AA from S&P 500, resulting in favorable borrowing rates.
Leveraging its financial stability, Chevron is committed to delivering value to its shareholders through a secure quarterly dividend of $1.51 per share (or $6.04 per share annually) and an expansive stock repurchase program totaling up to $75 billion.
Devon Energy Corporation (DVN - Free Report) is an independent energy company primarily involved in the exploration, development and production of oil and natural gas, with a focus on onshore areas in North America, particularly the United States.
Devon is actively managing its debt with a strategic approach to reduce its burden. As of Sep 30, 2023, the company’s long-term debt stood at $5,675 million, reflecting an 8.3% decrease from the $6,189 million recorded on Dec 31, 2022. DVN’s current ratio, nearing 1 at the close of the third quarter, signifies its financial robustness and capacity to meet immediate debt commitments.
Devon has been consistently increasing its fixed dividend over the past two years, reaching 20 cents per share in the first quarter of 2023. Furthermore, it has distributed variable dividends in the initial three quarters of 2023, underscoring its dedication to delivering returns to shareholders.
Occidental Petroleum (OXY - Free Report) benefits from its continued emphasis on Permian resources. The core development area in the Permian region consistently delivers good outcomes. With the addition of wells, production in this region is anticipated to increase. OXY’s investment plans and production growth contribute to its ability to generate cash flow.
The company has been actively decreasing its long-term debt through repayments and cash tenders, showcasing effective debt management strategies since the acquisition of Anadarko. Its current ratio, standing at nearly 1 as of the end of third-quarter 2023, underscores Occidental Petroleum’s substantial financial strength, affirming its capability to fulfill near-term obligations.
OXY, buoyed by steady production and cash flow growth, consistently pays dividends. Despite a temporary reduction for liquidity preservation, strong financial performance prompted a board-approved increase to 18 cents per share. In February 2023, a new $3-billion share repurchase program, surpassing the prior one, was authorized. By the third-quarter end, Occidental Petroleum completed 60% of the program.
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4 Energy Stocks Poised to Outperform Their Market in 2024
The oil and gas industry is poised for a strong beginning in 2024, primarily attributed to its robust financial position and elevated oil prices. The industry’s resilience is expected to provide financial backing for investments and dividends. This will support its disciplined capital programs and a strategic focus on shareholder interests.
Maintaining a secure balance sheet and holding substantial cash reserves is imperative, especially in the cyclical Oil/Energy sector. A strong financial foundation not only enhances a company’s valuation but also serves as a protective buffer during downturns in the industry. Also, regular dividends can be a sign of a company's strong financial health and its ability to generate cash.
Amid dynamic market shifts and technological advancements, investors with foresight are closely monitoring stocks within the energy sector that have the potential to outperform the market in 2024.
Here are four energy stocks, chosen based on their innovation, market position and financial health, which show promising prospects. All four companies mentioned below currently carry a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Liberty Energy (LBRT - Free Report) offers hydraulic fracturing services to onshore upstream energy companies across multiple basins in North America. The company’s total assets grew from $2.6 billion as of Dec 31, 2022, to $3 billion as of Sep 30, 2023. This demonstrates a robust balance sheet and efficient asset management.
Liberty is in a commendable financial position. As of Sep 30, 2023, the company had approximately $27 million in cash and cash equivalents, supported by its revolving credit facility. Notably, Liberty’s debt-to-capitalization ratio is a mere 11.1%, in stark contrast to many peers grappling with significantly higher debt levels, constituting 50% of their total capital structures.
Liberty has experienced a substantial dividend growth of 70% over the past year. This suggests that the company is actively increasing its dividend payments, which can be attractive to income-seeking investors. LBRT offers an annual dividend of 28 cents per share.
Chevron Corporation (CVX - Free Report) is one of the largest publicly traded oil and gas companies operating across diverse regions worldwide. This San Ramon, CA-based company is fully integrated, engaging in every facet of the energy sector, encompassing oil production, refining and marketing.
CVX’s robust financial position is evident in its clean balance sheet, characterized by a relatively low debt-to-equity ratio. As of Sep 30, Chevron has $5.9 billion in cash and cash equivalents, with a total debt of $20.6 billion and a conservative debt-to-total capitalization ratio of 11%. This financial strength has earned Chevron a high investment-grade rating of AA from S&P 500, resulting in favorable borrowing rates.
Leveraging its financial stability, Chevron is committed to delivering value to its shareholders through a secure quarterly dividend of $1.51 per share (or $6.04 per share annually) and an expansive stock repurchase program totaling up to $75 billion.
Devon Energy Corporation (DVN - Free Report) is an independent energy company primarily involved in the exploration, development and production of oil and natural gas, with a focus on onshore areas in North America, particularly the United States.
Devon is actively managing its debt with a strategic approach to reduce its burden. As of Sep 30, 2023, the company’s long-term debt stood at $5,675 million, reflecting an 8.3% decrease from the $6,189 million recorded on Dec 31, 2022. DVN’s current ratio, nearing 1 at the close of the third quarter, signifies its financial robustness and capacity to meet immediate debt commitments.
Devon has been consistently increasing its fixed dividend over the past two years, reaching 20 cents per share in the first quarter of 2023. Furthermore, it has distributed variable dividends in the initial three quarters of 2023, underscoring its dedication to delivering returns to shareholders.
Occidental Petroleum (OXY - Free Report) benefits from its continued emphasis on Permian resources. The core development area in the Permian region consistently delivers good outcomes. With the addition of wells, production in this region is anticipated to increase. OXY’s investment plans and production growth contribute to its ability to generate cash flow.
The company has been actively decreasing its long-term debt through repayments and cash tenders, showcasing effective debt management strategies since the acquisition of Anadarko. Its current ratio, standing at nearly 1 as of the end of third-quarter 2023, underscores Occidental Petroleum’s substantial financial strength, affirming its capability to fulfill near-term obligations.
OXY, buoyed by steady production and cash flow growth, consistently pays dividends. Despite a temporary reduction for liquidity preservation, strong financial performance prompted a board-approved increase to 18 cents per share. In February 2023, a new $3-billion share repurchase program, surpassing the prior one, was authorized. By the third-quarter end, Occidental Petroleum completed 60% of the program.