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Capitalize on the Energy Sector's Strength With These 3 Stocks

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Energy stocks have been blistering hot throughout 2022, rewarding investors with a multitude of gains all year. In a gloomy market environment that has exhausted market participants, this sector has been one of the few bright spots.

The Zacks Oils and Energy Sector currently ranks #1 out of all 16 sectors, and with a year-to-date performance of +33.8%, it’s no secret why the sector has remained at the top of the list for some time now.

The table below shows the performance of the sector in several different timeframes.

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Image Source: Zacks Investment Research

As we can see, the sector’s return throughout 2022 has easily surpassed the S&P 500’s decline of 17%. Companies within this sector have been cruising.

To capitalize on the sector’s strength, investors must pick strong stocks that will provide them with their desired gains. Three highly ranked stocks within the sector include Marathon Petroleum Corporation (MPC - Free Report) , CNX Resources Corporation (CNX - Free Report) , and TotalEnergies SE (TTE - Free Report) .

Let’s get into why these three companies would be solid bets moving forward for investors seeking exposure to the sector.

TotalEnergies SE

TotalEnergies SE (TTE - Free Report) is an extensive energy company. It produces and markets energies globally, with operations spanning across oil, biofuels, natural gas, green gases, renewables, and electricity.

Throughout 2022, shares have displayed a high blend of valuable defense and appreciation, up nearly 19% and easily crushing the S&P 500’s year-to-date decline of 17%.

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TTE’s current forward P/E ratio is sitting nicely at 4.9X, an absolute steal compared to 2020 highs of 49.1X and the median of 11.4X over the last five years. Additionally, the value represents a steep 78% discount relative to the S&P 500’s forward earnings multiple of 17.6X.

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In addition to robust share strength and attractive valuation levels, analysts have been upping their earnings outlook across the board over the last 60 days. Keep tabs on the upcoming quarterly release, as the $3.06 per share estimate reflects a massive triple-digit growth in earnings of 140% compared to the year-ago quarter.

For the full current fiscal year, earnings are forecasted to climb a sizable 76%.

TotalEnergies SE is a Zacks Rank #1 (Strong Buy) with an overall VGM Score of an A.

CNX Resources Corporation

CNX Resources Corporation (CNX - Free Report) is the premier independent natural gas development, production, and midstream company. The company’s operations are centered in the major shale formations of the Appalachian basin.

CNX shares have soared throughout 2022, providing investors with a massive 58% return that easily crushes the S&P 500’s performance. The robust share strength bodes well for the company’s health – investors have defended this stock throughout the year, buying any weakness.

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Image Source: Zacks Investment Research

CNX’s forward price-to-sales ratio is sitting nicely at 1.7X, well below highs of 2.2X earlier in 2022, and just above the median of 1.6X over the last five years. Additionally, the value represents a sizable 60% discount relative to the S&P 500’s forward price-to-sales ratio of 4.1X.

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Positive estimate revisions have been flying in left and right for the company over the last 60 days. The Consensus Estimate Trend has climbed nearly 60% to $0.71 per share for the upcoming quarter, displaying a massive triple-digit growth in earnings of nearly 300% from the year-ago quarter.  

Furthermore, full-year earnings for the company are forecasted to grow by 85% year-over-year, with the annual EPS estimate increasing 45% on the back of six analysts positively revising their outlook over the last 60 days.

CNX is a Zacks Rank #2 (Buy) with an overall VGM Score of an A.

Marathon Petroleum Corporation

Marathon Petroleum Corporation (MPC - Free Report) is a leading independent refiner, transporter, and marketer of petrol products with refineries spanning across a vast portion of the United States.

MPC shares have been blistering hot year-to-date, providing investors with an incredible 56% return that easily trounces the S&P 500. As we can see in the chart, shares have been on a strong uptrend throughout the year, with investors swooping in to buy every slight pullback.

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Image Source: Zacks Investment Research

The company has a very low forward price-to-sales ratio of 0.4X, which is well below 2018 highs of 0.7X and just barely above its median of 0.3X over the last five years. Furthermore, the value reflects a deep 90% discount relative to the S&P 500’s forward price-to-sales ratio.

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Image Source: Zacks Investment Research

Like TTE and CNX, analysts have been rapidly revising their estimates upwards over the last 60 days – undoubtedly a bullish signal. In fact, the Consensus Estimate Trend for the upcoming quarter has soared 116% to $4.32 per share, reflecting a jaw-dropping 550% jump in earnings from the year-ago quarter.

Additionally, five analysts have upwardly revised their current full-year EPS estimates, boosting the Consensus Estimate Trend by 85% and reflecting year-over-year earnings growth in the triple-digits of a mind-boggling 350%.

MPC is a Zacks Rank #2 (Buy) with an overall VGM Score of an A.

Bottom Line

It’s critical for investors to find trends within the market and ride them to considerable gains. Right now, the best trend to ride in 2022 has been energy, as displayed by the sector’s robust year-to-date performance.

Energy has shown little signs of slowing down, and neither have the three stocks mentioned above. They all carry attractive valuation levels, promising bottom-line growth, and have displayed immense relative strength.

Additionally, all three companies sport a Zacks Rank #2 (Buy) or higher, which further instills great confidence in share appreciation moving forward. These three companies would be great places to park cash for investors looking to ride the energy wave.


In-Depth Zacks Research for the Tickers Above


Normally $25 each - click below to receive one report FREE:


CNX Resources Corporation. (CNX) - free report >>

Marathon Petroleum Corporation (MPC) - free report >>

TotalEnergies SE Sponsored ADR (TTE) - free report >>