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3 Energy Stocks Suited Nicely for Momentum Investors

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Relative strength focuses on stocks that have performed well compared to the market as a whole or another relevant benchmark. And by targeting those displaying this favorable price action, investors can find themselves in positive market trends where buyers are in control.

A fitting example is the Zacks Oils and Energy sector, which has gained more than 4% over the last month compared to the S&P 500’s slight 0.2% gain. Rising oil prices have investors interested in the sector again, particularly following Saudi Arabia and Russia announcing an extension to their crude production cuts.  

For those interested in the recent momentum, three stocks – Exxon Mobil (XOM - Free Report) , Chevron (CVX - Free Report) , and Marathon Petroleum (MPC - Free Report) – could all be considered. Below is a chart illustrating the share performance of each over the last month, with the S&P 500 blended in as a benchmark.

Zacks Investment Research
Image Source: Zacks Investment Research

Let’s take a closer look at each.

Exxon Mobil

Exxon Mobil, an undisputed titan in the energy space, owns some of the most prolific upstream assets globally. The company posted somewhat mixed quarterly results in its latest release, falling short of earnings expectations but posting an upbeat 5% revenue beat.

The market took the results in stride, sending XOM shares on an upward trajectory post-earnings.

Zacks Investment Research
Image Source: Zacks Investment Research

Income-focused investors will appreciate XOM shares, currently yielding a solid 3.2% annually with a payout ratio of 29% of the company’s earnings. Just throughout its latest quarter, Exxon Mobil paid out $3.7 billion in dividends to shareholders.

Zacks Investment Research
Image Source: Zacks Investment Research

The company’s growth is forecasted to cool following last year’s strong performance, with earnings forecasted to decline 36% on 17% lower revenues in its current year (FY23).

Marathon Petroleum

Marathon Petroleum is a leading independent refiner, transporter, and marketer of petroleum products. Analysts have taken a bullish stance on the company’s earnings outlook, raising expectations across all timeframes over the last few months.

Zacks Investment Research
Image Source: Zacks Investment Research

MPC has been firing on all cylinders as of late, exceeding the Zacks Consensus EPS Estimate by an average of 15% across its last four quarters. In the latest release in early August, the company penciled in a 17% EPS beat and an 18% revenue surprise, sending shares soaring post-earnings.

As shown below, the company’s top line growth has significantly cooled but overall remains above pre-pandemic levels.

Zacks Investment Research
Image Source: Zacks Investment Research

MPC shares currently yield 2.1% annually, below the Zacks Oils and Energy sector average by a fair margin. Still, the company has shown a commitment to increasingly rewarding its shareholders amid the favorable operating environment, boosting its dividend payout by nearly 30% just over the last year.

Chevron

Chevron is one of the world's largest publicly traded oil and gas companies with operations that span nearly every corner of the globe. The company’s growth is expected to taper in its current year, with expectations alluding to 30% lower earnings on an 18% revenue decline.

Zacks Investment Research
Image Source: Zacks Investment Research

Like those above, the company has continued to display its shareholder-friendly nature, distributing $2.8 billion in dividends to shareholders throughout its latest quarter. Currently, CVX shares yield 3.7%, with the payout growing more than 6% just over the last year.

Zacks Investment Research
Image Source: Zacks Investment Research

Bottom Line

Energy stocks have been standout performers in the near term, with rising oil prices causing investors to re-find interest within the space.

And for those interested in tapping into the momentum, all three stocks above – Exxon Mobil (XOM - Free Report) , Chevron (CVX - Free Report) , and Marathon Petroleum (MPC - Free Report) – could be considered.


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