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4 Must-Buy Energy Stocks Set to Beat on Q2 Earnings This Week

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We are in the middle of the second-quarter 2021 earnings season with more than 1,500 companies slated to release their quarterly results this week. The earnings season is so far very impressive.

In line with the strong earnings momentum, four energy stocks are set to beat second quarter earnings this week. These stocks currently having a combination of a Zacks Top Rank and a possible earnings beat. Investment in these stocks may be prudent going forward.

Last quarter was an impressive one for the energy sector courtesy of the global deployment of COVID-19 vaccines and a faster-than-expected reopening of the U.S. and global economies. As a result, commodity prices, especially crude oil and natural gas prices soared.

Robust Q2 Earnings So Far

As of Jul 30, 296 companies of the S&P 500 Index reported results. Total earnings of these companies were up 102% year over year on 26.8% higher revenues. Moreover, 89.2% of these companies beat their earnings per share (EPS) estimates and a record 87.5% surpassed revenue estimates.

For the second quarter as a whole, total earnings of the S&P 500 Index are expected to be up 88.3% year over year on 22.2% higher revenues. This indicates an improvement over the initial projection of EPS increasing 62.2% from the same period last year on 18.2% higher revenues.  

These estimates are impressive primarily because second-quarter 2020 witnessed a lockdown owing to the global outbreak of the deadly coronavirus.

Notwithstanding favorable comparisons with last year, second-quarter 2021 earnings estimates indicate 27.5% growth from the pre-pandemic second quarter of 2019. In fact, the earnings estimates for 2021 have been growing steadily since the beginning of this year.

Our Top Picks

The four energy stocks discussed here are slated to release second-quarter earnings results this week. Each of these stocks carries a Zacks Rank# 1 (Strong Buy) and has a positive Earnings ESP. You can see the complete list of today’s Zacks #1 Rank stocks here.

Our research shows that for stocks with the combination of a positive Earnings ESP and a Zacks Rank #3 (Hold) or better, the chance of an earnings beat is as high as 70%. These stocks are anticipated to appreciate after earnings releases. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

The chart below shows the price performance of our four picks in the last quarter.

Zacks Investment Research
Image Source: Zacks Investment Research

Continental Resources Inc. (CLR - Free Report) explores, develops and produces crude oil and natural gas primarily in the north, south, and east regions of the United States. It sells its crude oil and natural gas production to energy marketing companies, crude oil refining companies, and natural gas gathering and processing companies. Continental Resources has a premier position in the Bakken area.

The company has an Earnings ESP of +2.77%. It has an expected earnings growth rate of more than 100% for the current year. The Zacks Consensus Estimate for the current year has improved 4% over the last 7 days. The company is set to release earnings results on Aug 2, after the closing bell.

Magnolia Oil & Gas Corp. (MGY - Free Report) is engaged in the acquisition, development, exploration, and production of oil, natural gas, and natural gas liquids reserves in the United States. Its oil-heavy Karnes County acreage — the primary focus of its operational plans — is considered one of the best shale positions in the United States.

The company has an Earnings ESP of +5.82%. It has an expected earnings growth rate of more than 100% for the current year. The Zacks Consensus Estimate for the current year has improved 24.6% over the last 30 days.

It recorded earnings surprises in three out of the last four reported quarters, with an average beat of 22.9%. The company is set to release earnings results on Aug 3, before the opening bell.

Devon Energy Corp. (DVN - Free Report) is primarily engaged in the exploration, development, and production of oil, natural gas and natural gas liquids in the United States and Canada. Its diversified portfolio and focus on high-margin assets hold significant long-term growth potential.

Devon Energy is focused on introducing advanced technology to produce high oil volumes from wells, implement cost savings initiatives and generate peer-leading returns on invested capital for its shareholders.

The company has an Earnings ESP of +0.15%. It has an expected earnings growth rate of more than 100% for the current year. The Zacks Consensus Estimate for the current year has improved  2.3% over the last 7 days.

It recorded earnings surprises in three out of the last four reported quarters, with an average beat of 2.3%. The company is set to release earnings results on Aug 3, after the closing bell.

EOG Resources Inc. (EOG - Free Report) has an attractive growth profile, a huge inventory of drilling opportunities, upper quartile returns and a disciplined management team. It has significant acreages in oil shale plays like Permian, Bakken and Eagle Ford.

The company has an Earnings ESP of +0.50%. It has an expected earnings growth rate of more than 100% for the current year. The Zacks Consensus Estimate for the current year has improved  20% over the last 7 days.

It recorded earnings surprises in three out of the last four reported quarters, with an average beat of 51%. The company is set to release earnings results on Aug 4, after the closing bell.