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3 Mid-Cap Energy Stocks Investors Can Buy Right Now
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The year 2023 witnessed a substantial surge in Wall Street, driven by declining inflation and reduced interest rate hikes by the Federal Reserve. The S&P 500 was up about 24% last year, nearing its all-time highs. Despite the positive market outlook, the Oil/Energy sector experienced a negative total return in 2023, down 3.3% as measured by the Energy Select Sector SPDR Fund.
However, the picture looks somewhat better in 2024. While weak global economic growth is predicted to limit fuel consumption, geopolitical tensions could provide support to the commodity. We believe that investing in mid-cap energy stocks could turn out to be the right choice at this juncture. Our choices include Sunoco LP (SUN - Free Report) , Oceaneering International, Inc. (OII - Free Report) and Helix Energy Solutions Group, Inc. (HLX - Free Report) .
Looking Back at the 2023 Oil/Energy Scenario
WTI crude prices ended the year at around $72 per barrel, approximately 20% lower than the 2023 highs in September. The decline was attributed to global economic uncertainties, increased production outside OPEC and abundant inventories. Even Brent prices, the global benchmark, ended 2023 at just above $77 per barrel. That’s a far cry from predictions of oil prices reaching $100. However, the price did reach a peak of $94.36 per barrel in September, which was influenced by increased supplies from the United States and Iran, coupled with slower-than-expected demand growth from China.
Natural gas, too, fared badly in 2023. For the most part, it traded below $3 due to high production and weak weather-related demand predictions.
What to Expect in 2024?
OPEC remains optimistic about the oil market's future, emphasizing strong demand for crude oil despite recent price drops. The organization cites overall global economic growth, accommodative monetary policies and improved geopolitical conditions as factors supporting positive market fundamentals. While the cartel recognizes growth in non-OPEC oil production, with the United States playing a significant role in this increase, it remains cautiously optimistic for the market in 2024. Some investors view the current crude slump as temporary, leading them to build or increase positions in oil-related companies.
Focus on Mid-Cap Stocks
Given this moderately bullish sentiment, it will be wise for investors to apportion their funds in mid-cap oil stocks. These companies often present a balanced profile, offering more growth potential than large caps while being less volatile than small caps. They have room for expansion and can capitalize on market opportunities without the constraints of larger, more established companies. Companies with market capitalization between $1 billion and $10 billion are generally considered mid-cap firms.
To make life simpler for investors, we have identified three mid-cap energy companies with a good value score to put your money on. These are Sunoco, Oceaneering International and Helix Energy.
The Zacks Rank is a reliable tool that helps you trade with confidence regardless of your trading style and risk tolerance. To learn more about how you can use this proven system for market-beating gains, visit Zacks Rank Education.
Our research shows that stocks with a Value Score of A or B, when combined with a Zacks Rank #1 (Strong Buy) or 2 (Buy), offer the best opportunities in the value investing space.
Sunoco: It is a significant player in the U.S. wholesale motor fuel distribution market, operating as a master limited partnership. The company's primary business involves distributing motor fuel to a diverse customer base of approximately 10,000, including independent dealers, commercial clients, convenience stores and distributors.
SUN stands out as one of the largest motor fuel distributors in terms of volume. The partnership's strategy involves distributing more than 10 fuel brands through long-term contracts with over 10,000 convenience stores, boasting a remarkable retention rate exceeding 90%. The distribution networks are a key strength, contributing to the company's sustainable and predictable cash flow.
Sunoco’s earnings beat the Zacks Consensus Estimate in two of the trailing four quarters and missed in the other two, delivering an average surprise of 28.33%. The company is valued at around $5.61 billion. Sunoco carries a Zacks Rank#1 and has a Value score of B at present. Its shares have risen 18.8% in a year.
Oceaneering International: It stands out as a prominent supplier of offshore equipment and technology solutions within the energy industry. As a key player, the company is deeply involved in all phases of the offshore oilfield lifecycle, offering integrated technology solutions.
Oceaneering International's strength lies in its geographically diversified asset base, spanning across the United States and other global regions. Notably, the company maintains a balanced revenue distribution, with an even split between international and domestic operations that serves to mitigate its risk profile.
The Zacks Consensus Estimate for 2024 earnings per share indicates 76.36% growth over 2023. OII carries a Zacks Rank #1 and a Value Score of A at present. Its current market cap is roughly $2.08 billion. The company’s shares have risen 5.4% in a year.
Helix Energy: It is an international offshore energy company, specializing in providing services to the offshore energy industry. The company focuses on well intervention and robotics operations within its Contracting Services, aiming to play a critical role in the development of offshore reservoirs and maximizing production economics. Helix emphasizes on delivering cost-effective services with a commitment to zero incidents.
A distinctive aspect of Helix's strategy involves aligning the interests of producers and contractors by investing in mature offshore oil and gas properties, hub production facilities and proven undeveloped reserve plays. The company utilizes its diverse contracting fleet of vessels to add value to these ventures. This integration of marine contracting and oil and gas operations is designed to bring stability to revenues and earnings, mitigating the cyclical nature of the energy industry.
The Zacks Consensus Estimate for 2024 earnings per share indicates 238.10% growth over 2023. HLX carries a Zacks Rank #2 and a Value score of B at present. The company’s current market cap is roughly $1.48 billion. Its shares have risen 23.4% in a year.
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3 Mid-Cap Energy Stocks Investors Can Buy Right Now
The year 2023 witnessed a substantial surge in Wall Street, driven by declining inflation and reduced interest rate hikes by the Federal Reserve. The S&P 500 was up about 24% last year, nearing its all-time highs. Despite the positive market outlook, the Oil/Energy sector experienced a negative total return in 2023, down 3.3% as measured by the Energy Select Sector SPDR Fund.
However, the picture looks somewhat better in 2024. While weak global economic growth is predicted to limit fuel consumption, geopolitical tensions could provide support to the commodity. We believe that investing in mid-cap energy stocks could turn out to be the right choice at this juncture. Our choices include Sunoco LP (SUN - Free Report) , Oceaneering International, Inc. (OII - Free Report) and Helix Energy Solutions Group, Inc. (HLX - Free Report) .
Looking Back at the 2023 Oil/Energy Scenario
WTI crude prices ended the year at around $72 per barrel, approximately 20% lower than the 2023 highs in September. The decline was attributed to global economic uncertainties, increased production outside OPEC and abundant inventories. Even Brent prices, the global benchmark, ended 2023 at just above $77 per barrel. That’s a far cry from predictions of oil prices reaching $100. However, the price did reach a peak of $94.36 per barrel in September, which was influenced by increased supplies from the United States and Iran, coupled with slower-than-expected demand growth from China.
Natural gas, too, fared badly in 2023. For the most part, it traded below $3 due to high production and weak weather-related demand predictions.
What to Expect in 2024?
OPEC remains optimistic about the oil market's future, emphasizing strong demand for crude oil despite recent price drops. The organization cites overall global economic growth, accommodative monetary policies and improved geopolitical conditions as factors supporting positive market fundamentals. While the cartel recognizes growth in non-OPEC oil production, with the United States playing a significant role in this increase, it remains cautiously optimistic for the market in 2024. Some investors view the current crude slump as temporary, leading them to build or increase positions in oil-related companies.
Focus on Mid-Cap Stocks
Given this moderately bullish sentiment, it will be wise for investors to apportion their funds in mid-cap oil stocks. These companies often present a balanced profile, offering more growth potential than large caps while being less volatile than small caps. They have room for expansion and can capitalize on market opportunities without the constraints of larger, more established companies. Companies with market capitalization between $1 billion and $10 billion are generally considered mid-cap firms.
To make life simpler for investors, we have identified three mid-cap energy companies with a good value score to put your money on. These are Sunoco, Oceaneering International and Helix Energy.
The Zacks Rank is a reliable tool that helps you trade with confidence regardless of your trading style and risk tolerance. To learn more about how you can use this proven system for market-beating gains, visit Zacks Rank Education.
Our research shows that stocks with a Value Score of A or B, when combined with a Zacks Rank #1 (Strong Buy) or 2 (Buy), offer the best opportunities in the value investing space.
You can see the complete list of today’s Zacks #1 Rank stocks here.
Sunoco: It is a significant player in the U.S. wholesale motor fuel distribution market, operating as a master limited partnership. The company's primary business involves distributing motor fuel to a diverse customer base of approximately 10,000, including independent dealers, commercial clients, convenience stores and distributors.
SUN stands out as one of the largest motor fuel distributors in terms of volume. The partnership's strategy involves distributing more than 10 fuel brands through long-term contracts with over 10,000 convenience stores, boasting a remarkable retention rate exceeding 90%. The distribution networks are a key strength, contributing to the company's sustainable and predictable cash flow.
Sunoco’s earnings beat the Zacks Consensus Estimate in two of the trailing four quarters and missed in the other two, delivering an average surprise of 28.33%. The company is valued at around $5.61 billion. Sunoco carries a Zacks Rank#1 and has a Value score of B at present. Its shares have risen 18.8% in a year.
Oceaneering International: It stands out as a prominent supplier of offshore equipment and technology solutions within the energy industry. As a key player, the company is deeply involved in all phases of the offshore oilfield lifecycle, offering integrated technology solutions.
Oceaneering International's strength lies in its geographically diversified asset base, spanning across the United States and other global regions. Notably, the company maintains a balanced revenue distribution, with an even split between international and domestic operations that serves to mitigate its risk profile.
The Zacks Consensus Estimate for 2024 earnings per share indicates 76.36% growth over 2023. OII carries a Zacks Rank #1 and a Value Score of A at present. Its current market cap is roughly $2.08 billion. The company’s shares have risen 5.4% in a year.
Helix Energy: It is an international offshore energy company, specializing in providing services to the offshore energy industry. The company focuses on well intervention and robotics operations within its Contracting Services, aiming to play a critical role in the development of offshore reservoirs and maximizing production economics. Helix emphasizes on delivering cost-effective services with a commitment to zero incidents.
A distinctive aspect of Helix's strategy involves aligning the interests of producers and contractors by investing in mature offshore oil and gas properties, hub production facilities and proven undeveloped reserve plays. The company utilizes its diverse contracting fleet of vessels to add value to these ventures. This integration of marine contracting and oil and gas operations is designed to bring stability to revenues and earnings, mitigating the cyclical nature of the energy industry.
The Zacks Consensus Estimate for 2024 earnings per share indicates 238.10% growth over 2023. HLX carries a Zacks Rank #2 and a Value score of B at present. The company’s current market cap is roughly $1.48 billion. Its shares have risen 23.4% in a year.