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3 Top Ranked Oil and Gas Stocks for Investors to Buy Today
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Over the last year, energy has been the best performing sector in the market. High oil prices have been the major catalyst pushing energy stocks higher, and there are several factors keeping prices elevated.
Inflation, and the increased cost of labor and goods.
The Russian - Ukrainian war has raised uncertainty in the European energy market and created trade bans with Russia thus tightening oil supply.
Structural shortages of oil production due to underinvestment in energy infrastructure.
There are several oil and gas stocks with upward trending earnings revisions giving them high Zacks Ranks scores. Furthermore, according to the Zacks Industry Rank, Oil and Gas – Refining and Marketing is in the top 5% (12 out of 251) of industries.
Image Source: Zacks Investment Research
Valero Energy
Valero Energy (VLO - Free Report) is a deeply diversified oil refinery company with 15 plants across the U.S., Canada, and the Caribbean and capacity to refine 3.2 million barrels a day. The majority of VLO’s refinery plants are located in the Gulf Coast with easy access to export facilities, boosting margins. Valero recently reported strong fourth-quarter results with a 13% upside surprise on EPS.
VLO has been a top performing stock over the past year, trouncing the returns of the broad market and more than doubling returns of its respective sector. Even after the price of oil peaked back in March 2022, VLO stock is still pushing near its all-time highs.
Image Source: Zacks Investment Research
Because of its strong performance and prospects VLO currently boasts a Zacks Rank #1 (Strong Buy), indicating upward trending earnings revisions. In the table below, you can estimates across time frames dipped significantly between 90 and 30 days ago. But the estimates have been revised dramatically higher over the last 30 days.
Current quarter earnings estimates are projected to jump nearly 200% YoY to $6.90 per share.
VLO also has encouraging Zacks Style Scores, earning an A for Value, B for Growth, and A for Momentum.
Image Source: Zacks Investment Research
Valero Energy currently trades at a one-year forward P/E of 6x, well below its 10-year median of 10x, and in line with the industry's average. Additionally, VLO offers a dividend yield of 3.1%. We can see that although the path of dividend increases has been volatile, it has been increasing over the last two decades.
Image Source: Zacks Investment Research
Image Source: Zacks Investment Research
Marathon Petroleum
Marathon Petroleum (MPC - Free Report) , is a U.S. based integrated, downstream energy company. MPC operates through two segments, Refining and Marketing and Pipeline Transportation. Refining and Marketing operates 16 refineries with a crude processing capacity of 3 million barrels per day. In 2022 the refining business recorded $16.5 billion in profits. Pipeline transportation, operating as a partnership with Andeavor Logistics transports oil products and manages logistics. It earned $4.5 billion in profits in 2022.
Additionally, in 2021, Marathon Petroleum sold its Speedway retail gasoline business for $21 billion to Japanese retail group Seven & I Holdings – owner of the 7-Eleven convenience store chain.
MPC currently has a Zacks Rank #2 (Buy), indicating that earnings expectations are being revised higher. In the chart below we can see that both 2023 and 2024 expectations are clearly trending higher.
Image Source: Zacks Investment Research
Like VLO, MPS has seen the majority of positive revisions happen over the last 30 days. All projections have been revised significantly higher, besides next quarter.
Image Source: Zacks Investment Research
Marathon Petroleum is currently trading at 7x one-year forward P/E, which is below its 5-year median of 9x, and just above the industry average 6x. MPC also offers a dividend yield of 2.5%. And MPC has consistently raised its payout, raising its dividends/share from $0.60 per share in 2012, to $2.50 per share today.
Image Source: Zacks Investment Research
Phillips 66
Phillips 66 (PSX - Free Report) is an oil and gas midstream, chemicals, refining and marketing company. Refining is the primary contributor to the top line, and PSX operates 13 refineries across the U.S. and Europe. Midstream businesses, which focus on transportation and storage of petroleum have been flourishing of late. Considering the lack of energy infrastructure that has taken place over the last decade, many investors have become keen on the sector.
PSX has a Zacks Rank #2 (Buy), indicating upward trending earnings revisions. Additionally, the stock earns an A grade across Zacks Style Scores Value, Growth and Momentum. Current quarter sales estimates are projecting a YoY decrease of -4.5% to $35 billion, but earnings are still expected to grow. Current quarter EPS of $3.86 per share would mark a 193% YoY increase.
PSX also boasts a very reasonable valuation. The stock is currently trading at a one-year forward P/E of 7x, below its 10-year median of 12x, and just above the industry average of 6x.
Image Source: Zacks Investment Research
PSX is also a great dividend stock with a current yield of 4.2%, and a long history of raising dividend payments.
Image Source: Zacks Investment Research
Conclusion
We covered what is pushing oil prices higher, but whether these issues will persist is of course unknown. For the time being all these factors are still at play though. A major sell-off in oil prices, or a slowdown in economic output would be a thorn in the bullish energy thesis.
Oil and gas stocks have made an epic comeback since the 2020 pandemic era. Oil futures at one point during the depths of Covid traded -$16. It was also a popular narrative that the world would soon be running off entirely alternative energy sources and driving electric cars. While that may be true eventually, oil, gas and other fossil fuels are still the primary sources of energy for the world.
Furthermore, as seen in this report, oil and gas companies make for great stocks, with strong business models, reasonable valuations, and generous dividends. Because of these traits, energy stocks make for a great addition to any investor’s portfolio.
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3 Top Ranked Oil and Gas Stocks for Investors to Buy Today
Over the last year, energy has been the best performing sector in the market. High oil prices have been the major catalyst pushing energy stocks higher, and there are several factors keeping prices elevated.
There are several oil and gas stocks with upward trending earnings revisions giving them high Zacks Ranks scores. Furthermore, according to the Zacks Industry Rank, Oil and Gas – Refining and Marketing is in the top 5% (12 out of 251) of industries.
Image Source: Zacks Investment Research
Valero Energy
Valero Energy (VLO - Free Report) is a deeply diversified oil refinery company with 15 plants across the U.S., Canada, and the Caribbean and capacity to refine 3.2 million barrels a day. The majority of VLO’s refinery plants are located in the Gulf Coast with easy access to export facilities, boosting margins. Valero recently reported strong fourth-quarter results with a 13% upside surprise on EPS.
VLO has been a top performing stock over the past year, trouncing the returns of the broad market and more than doubling returns of its respective sector. Even after the price of oil peaked back in March 2022, VLO stock is still pushing near its all-time highs.
Image Source: Zacks Investment Research
Because of its strong performance and prospects VLO currently boasts a Zacks Rank #1 (Strong Buy), indicating upward trending earnings revisions. In the table below, you can estimates across time frames dipped significantly between 90 and 30 days ago. But the estimates have been revised dramatically higher over the last 30 days.
Current quarter earnings estimates are projected to jump nearly 200% YoY to $6.90 per share.
VLO also has encouraging Zacks Style Scores, earning an A for Value, B for Growth, and A for Momentum.
Image Source: Zacks Investment Research
Valero Energy currently trades at a one-year forward P/E of 6x, well below its 10-year median of 10x, and in line with the industry's average. Additionally, VLO offers a dividend yield of 3.1%. We can see that although the path of dividend increases has been volatile, it has been increasing over the last two decades.
Image Source: Zacks Investment Research
Image Source: Zacks Investment Research
Marathon Petroleum
Marathon Petroleum (MPC - Free Report) , is a U.S. based integrated, downstream energy company. MPC operates through two segments, Refining and Marketing and Pipeline Transportation. Refining and Marketing operates 16 refineries with a crude processing capacity of 3 million barrels per day. In 2022 the refining business recorded $16.5 billion in profits. Pipeline transportation, operating as a partnership with Andeavor Logistics transports oil products and manages logistics. It earned $4.5 billion in profits in 2022.
Additionally, in 2021, Marathon Petroleum sold its Speedway retail gasoline business for $21 billion to Japanese retail group Seven & I Holdings – owner of the 7-Eleven convenience store chain.
MPC currently has a Zacks Rank #2 (Buy), indicating that earnings expectations are being revised higher. In the chart below we can see that both 2023 and 2024 expectations are clearly trending higher.
Image Source: Zacks Investment Research
Like VLO, MPS has seen the majority of positive revisions happen over the last 30 days. All projections have been revised significantly higher, besides next quarter.
Image Source: Zacks Investment Research
Marathon Petroleum is currently trading at 7x one-year forward P/E, which is below its 5-year median of 9x, and just above the industry average 6x. MPC also offers a dividend yield of 2.5%. And MPC has consistently raised its payout, raising its dividends/share from $0.60 per share in 2012, to $2.50 per share today.
Image Source: Zacks Investment Research
Phillips 66
Phillips 66 (PSX - Free Report) is an oil and gas midstream, chemicals, refining and marketing company. Refining is the primary contributor to the top line, and PSX operates 13 refineries across the U.S. and Europe. Midstream businesses, which focus on transportation and storage of petroleum have been flourishing of late. Considering the lack of energy infrastructure that has taken place over the last decade, many investors have become keen on the sector.
PSX has a Zacks Rank #2 (Buy), indicating upward trending earnings revisions. Additionally, the stock earns an A grade across Zacks Style Scores Value, Growth and Momentum. Current quarter sales estimates are projecting a YoY decrease of -4.5% to $35 billion, but earnings are still expected to grow. Current quarter EPS of $3.86 per share would mark a 193% YoY increase.
PSX also boasts a very reasonable valuation. The stock is currently trading at a one-year forward P/E of 7x, below its 10-year median of 12x, and just above the industry average of 6x.
Image Source: Zacks Investment Research
PSX is also a great dividend stock with a current yield of 4.2%, and a long history of raising dividend payments.
Image Source: Zacks Investment Research
Conclusion
We covered what is pushing oil prices higher, but whether these issues will persist is of course unknown. For the time being all these factors are still at play though. A major sell-off in oil prices, or a slowdown in economic output would be a thorn in the bullish energy thesis.
Oil and gas stocks have made an epic comeback since the 2020 pandemic era. Oil futures at one point during the depths of Covid traded -$16. It was also a popular narrative that the world would soon be running off entirely alternative energy sources and driving electric cars. While that may be true eventually, oil, gas and other fossil fuels are still the primary sources of energy for the world.
Furthermore, as seen in this report, oil and gas companies make for great stocks, with strong business models, reasonable valuations, and generous dividends. Because of these traits, energy stocks make for a great addition to any investor’s portfolio.