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5 Buy-Ranked Energy Stocks That Reported Solid Results This Week

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One thing the Russia-Ukraine war has achieved is a significant reduction in the availability of oil and other commodities, with a resultant increase in their prices. The impact of this on the oil market has been so severe and the price impact so substantial that we’ve practically forgotten that the market was not in such a great place to begin with.

There were shortages in the market when all this started, because of low inventories of both oil and alternative energy, particularly in Europe. Personal consumption was hard to meet and on top of that, industrial and travel demand was picking up (and continues to recover today) with COVID fears receding. This is why Europe was in no position to say no to Russian oil, despite the moral impetus to do so.

While Biden has taken steps to fill the gap caused by the Russian oil embargo, there are physical constraints to doing this, which have to do with equipment and labor shortages and overall cost inflation. So supply remains constrained and oil prices extremely high.

There are also some constraints related to the production of liquified natural gas (LNG - Free Report) , such as the infrastructure (pipelines to transport the commodity to the coast and liquefaction facilities on the coast to facilitate its transport), power shortage for operations, and to an extent, bad weather. Russia is also a big producer of LNG, so Europe is also short of this commodity as well and here again, the U.S. is unable to fill the gap leading to continued increase in prices.

Given this backdrop, investing in oil stocks seems to be a no-brainer. And recent results show that this segment is not cooling down any time soon. Let’s see a few from last week:

EOG Resources, Inc. (EOG - Free Report)

Despite the 34.4% miss on the top line, EOG Resources beat the Zacks Consensus Estimate on the bottom line by 8.4%. The company’s earnings estimates continue to climb: the 2022 estimate is up $3.35 (26%) in the last 30 days and the 2023 estimate is up $3.43 (29%).

This year, EOG Resources’ revenue and earnings are expected to increase 39% and 89%, respectively. The Zacks Rank #1 (Strong Buy) stock has Value, Growth and Momentum Scores of D, B and B, respectively. Its valuation of 7.76X P/E is relatively close to its lowest level over the past year, indicating that prices haven’t caught up with the estimate increases.

Devon Energy Corp. (DVN - Free Report)

Devon Energy reported a 5% revenue miss in the last quarter, although earnings beat by 8%. Things are expected to improve materially for Devon, as seen from the earnings estimate revisions. The 2022 estimate is up $1.74 (26%) in the last 30 days and the 2023 estimate is up $2.56 (40%).

Analysts currently expect a 47% revenue increase and 142% earnings increase for the current year. The Zacks Rank #1 stock has Value, Growth and Momentum Scores of D, A and B, respectively. It is also cheap. Devon Energy’s P/E of 7.79X is well below its median level over the past year.

BP plc. (BP - Free Report)

BP reported a 36.2% earnings surprise in the last quarter, which came on top of a sales surprise of -3.6%. The lone analyst providing estimates for BP raised 2022 and 2023 earnings estimates by $1.04 (21%) and $1.07 (25%), respectively. Revenue and earnings are currently expected to grow a respective 40% and 57% this year.

The Zacks Rank #2 (Buy) stock has Value, Growth and Momentum Scores of A, B and A, respectively. BP’s P/E of 5.41 is low compared to the industry average and is nowhere close to the S&P 500. It is also below its median level over the past year. So just as in EOG’s case, here too, prices haven’t kept up with estimate increases.

The Williams Companies, Inc. (WMB - Free Report)

The Williams Companies reported revenues that missed the Zacks Consensus by 21% even as earnings beat by 14%. Both 2022 and 2023 estimates were raised thereafter with the 2022 estimate increasing 18 cents (14%) and 2023 estimate increasing 24 cents (18%). Revenue and earnings for the current year are currently expected to increase 23% and 10%, respectively.

The Zacks Rank #2 stock has Value, Growth and Momentum Scores of D, B and B, respectively. On the valuation front, The Williams Companies is less attractive than the others, but there is still room to grow here. At 23.67X earnings, it is trading slightly above its median level over the past year.

Cheniere Energy, Inc. (LNG - Free Report)

The natural gas producer Cheniere Energy’s earnings surprise of 120% came on top of a revenue surprise of 18% in the last quarter. Analysts are also optimistic about Cheniere’s prospects, taking the 2022 estimate from $9.44 to $10.85 (up 15%) in the last 30 days. The 2023 estimate was also raised from $9.10 to $12.10 (25%) during the period. Cheniere’s revenue and earnings for 2022 are currently expected to increase a respective 65% and 217%.

The Zacks Rank #2 stock has Value, Growth and Momentum Scores of C, A and A, respectively. Cheniere trades at 11.69X P/E, which is above the industry but below its median level over the past year. The above-industry valuation seems justified given the company’s infrastructure assets, which set it apart from some of its peers.

One-Month Price Performance

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