Energy stocks have once again caught the attention of investors following The International Energy Agency's recent upward revision of the oil demand outlook. The favorable commodity pricing environment is supporting upstream operations, while downstream firms are enjoying steady cash flows. These conditions create opportunities for Energy Transfer LP (ET Quick QuoteET - Free Report) , Transportadora de Gas del Sur SA (TGS Quick QuoteTGS - Free Report) , and Helmerich & Payne Inc. (HP Quick QuoteHP - Free Report) to witness gains.

Favorable Energy Business

With West Texas Intermediate crude surpassing the $80 per barrel mark, the conditions are highly conducive for exploration and production endeavors. According to the short-term energy outlook from the U.S. Energy Information Administration, the average spot price for West Texas Intermediate crude is projected to be $82.15 per barrel this year. This price point is exceptionally promising for upstream operations, leading to increased demand for drilling activities and oilfield services in the prolific shale plays across the United States.

Higher production, following favorable commodity prices, is leading to an increased need for transportation and storage activities, aiding the midstream players. Additionally, companies and partnerships involved in natural gas transportation are generating consistent cash flows due to the commodity's cleaner and more efficient characteristics compared to traditional fuels. 

Which Stocks to Buy?

Amid supportive energy business, it would be wise for investors to bet on those stocks that are witnessing upward earnings estimate revisions and are undervalued.

Employing our proprietary stock screener, we have zeroed in on three such stocks. While one stock sports a Zacks Rank #1 (Strong Buy), the remaining two have a Zacks Rank #2 (Buy). All the stocks carry a Value Score of A.

You can see the complete list of today’s Zacks #1 Rank stocks here.   

3 Stocks in The Spotlight

Energy Transfer has a stable business model with its huge pipeline network of natural gas, oil and refined petroleum products across 125,000 miles. The partnership has midstream assets in all the key basins in the United States, thereby generating stable fee-based revenues.

Energy Transfer, sporting a Zacks Rank #1 (Strong Buy), has offered a higher dividend yield than the composite stocks belonging to the industry over the past year. For this year, the partnership has witnessed upward earnings estimate revisions over the past 30 days.

Transportadora de Gas’ midstream asset portfolio has the most extensive natural gas pipeline network in Latin America. It generates stable fee-based revenues since its pipeline assets transport more than 60% of the gas consumed in Argentina.

Over the past year, the stock gained 49.5%, outpacing the industry’s 17.5% increase. The outperformance is backed by the company’s stable business model and a strong focus on creating differential value for shareholders. Also, TGS, carrying a Zacks Rank #2 (Buy), has significantly lower debt exposure than the composite stocks belonging to the industry. Transportadora de Gas has seen upward earnings estimate revisions for 2024 over the past 30 days.

Helmerich & Payne is poised for growth as rising oil prices drive up exploration and production activities, resulting in greater demand for the company's drilling services and solutions. The Zacks #2 Ranked company’s super-spec FlexRigs is in high demand for unconventional drilling in key resources.

For fiscal 2024, Helmerich & Payne has witnessed upward earnings estimate revisions over the past 60 days.