The geopolitical crisis has had many investors turn their back on energy stocks. Various investors who initially made well through oil stocks are now looking for solid investments to keep themselves afloat. These are some expert-recommended oil stocks you can invest in today for maximum future gains.
How S&P Global Market Intelligence Rates the Stocks
Before diving deeper into the discussion regarding which oil stocks are worth your investment, let’s first understand how S&P Global Market Intelligence provides stock ratings.
S&P analysts review the trends and analyze them to rate the stocks. The scale on which they rate a stock begins from 1 to 5. Any stock corresponding to 1.0 has a strong Buy recommendation, whereas 5.0 is a Strong Sell.
Any stock lying in the middle, 2.5 or lower, is considered a Buy recommendation. Let’s discuss the three stocks you must invest in today to make the most out of them:
EOG Resources – Analyst Recommendation: 1.55
EOG Resources (EOG) is an energy company specializing in oil and gas exploration and production. Analysts say the company can generate substantial free cash flow for its shareholders.
EOG’s management is recognized for its disciplined approach, and the company has access to promising drilling prospects that result in returns above the industry average. Furthermore, EOG’s strong financial position and track record of increasing dividends make it an attractive investment prospect.
This stock in the oil industry is projected to have a potential growth of approximately 15% over the next year, as predicted by analysts who have set an average price target of $156.67. Including the dividend yield, the implied overall return is estimated to be 18%.
ConocoPhillips – Analyst Recommendation: 1.68
According to analysts, ConocoPhillips (COP) stock, which has already increased by 72% year-to-date, still has further potential for growth. Similar to other top oil stocks to consider, the shares of COP continue to appear reasonably priced.
With uncertainty surrounding the direction of oil prices, COP’s stock is trading at a mere 9.2 times the estimated earnings per share (EPS) for 2023, as projected by analysts. This valuation is a significant discount from the five-year average of 21.2 times the estimated EPS, according to the Refinitiv Stock Report Plus.
In addition, the bulls support this stock due to its prudent investment approach, robust free cash flow, and consistent cash distribution to shareholders through stock buybacks and dividends.
Diamondback Energy – Analyst Recommendation: 1.70
Focusing on oil and natural gas production in the Permian Basin of West Texas, Diamondback Energy (FANG) is an independent firm that has experienced a 33% rise in stock value this year. However, compared to the wider energy sector, which recorded a price gain exceeding 60% during the same period, it’s quite laggard.
Notwithstanding, financial analysts hold an optimistic view of FANG’s potential to yield substantial returns in the future. With an average target price of $181.40, the stock is expected to show an upside of 26% over the next year. In addition, accounting for the company’s bountiful dividend yield, investors can look forward to a 12-month total return of roughly 32%.
Whichever oil stock you invest in, remember to consult a professional first. The rapidly changing economic times and market fluctuation is dangerous for you if it’s your first time investing.