This article delves into the influential role of energy equities in enhancing your financial portfolio. It looks at the unique advantages of investing in energy stocks, highlighting their potential for significant growth and dynamic impact. It will also guide you through the complexities of the energy market in 2024, spotlighting leading companies at the forefront of innovation. Uncover the myriad opportunities and benefits energy stocks offer for your investment path.
Energy Industry Overview
Investing in energy stocks offers several benefits, attracting investors seeking stable returns and dividend income. Some investors favor energy stocks due to their historically steady performance and potential for capital appreciation. The energy industry navigates shifts influenced by global demand, renewable energy integration and geopolitical factors.
In 2024, the industry’s outlook appears optimistic, driven by an increased focus on renewable energy sources, innovations in clean energy, and heightened global energy demand, positioning energy stocks as a compelling investment avenue for those eyeing growth potential and resilience in a transitioning market landscape.
Methodology Used For These Picks
Our methodology hinges on finding well-known stocks with strong financials trading at reasonable prices. We analyze market sentiment and trends to spotlight the most sought-after energy stocks, reflecting their popularity among investors. We also assess the potential for these companies to grow by analyzing their innovation, financial stability and market influence. Lastly, we analyze popular valuation metrics and compare them to other alternatives to ensure they’re trading at fair or undervalued prices. This framework helps guide us to provide the best energy investments for 2024.
The brain trust at Forbes has run the numbers, conducted the research, and done the analysis to come up with some of the best places for you to make money in 2024. Download one of Forbes’ most popular and widely anticipated reports, 12 Best Stocks To Buy for 2024.
The 5 Best Energy Stocks For 2024
1. Targa Resources
- Industry/Sector: Consumer Entertainment
- Market Cap: $18 billion
- P/E: 22
- EPS (ttm): $3.82
- Dividend Yield: 2.4%
Targa Resources is a midstream energy company operating in the United States. It primarily gathers, processes and transports natural gas and natural gas liquids (NGLs). Targa operates an extensive network of pipelines, storage facilities and processing plants strategically positioned in key producing regions nationwide. The company links producers to end markets, offering essential infrastructure to support the energy supply chain. Targa’s operations focus on ensuring the efficient and reliable transportation of energy products, contributing to the stability of the overall energy sector.
Targa Resources stands out as a top energy stock for 2024 due to its diverse midstream operations, including natural gas gathering, processing and storage assets. The company benefits from its strategic position in prolific basins and extensive infrastructure, providing stability and growth potential. However, Targa faces challenges like exposure to commodity price fluctuations and regulatory changes impacting the energy industry. While its midstream focus typically offers steadier revenues, market volatility can still affect performance. Investors appreciate Targa’s robust infrastructure, stable cash flows and growth opportunities but should consider the impact of market conditions on its operations.
2. ExxonMobil
- Industry/Sector: Oil & Gas
- Market Cap: $394 billion
- P/E Ratio: 9.8
- EPS: $10.07
- Dividend Yield: 3.9%
ExxonMobil is one of the world’s largest publicly traded international oil and gas companies. With a global presence, it operates across various segments in the energy industry, including exploration, production, refining, and marketing of oil and natural gas and the manufacturing and sale of petrochemicals. ExxonMobil’s operations span numerous countries and involve energy-related activities, from upstream exploration and development to downstream refining and distribution. The company has a history of technological innovation and investments in research and development to improve energy efficiency and sustainability in its operations. Its significant presence in upstream and downstream activities positions it as a key player in the global energy landscape.
Exxon retains its status as a top energy stock for 2024 due to its global presence, significant oil and gas reserves and diversified operations in upstream and downstream segments. The company’s robust portfolio and operational efficiency contribute to its stability in the energy market. However, Exxon faces challenges such as volatile oil prices, geopolitical risks and a transitioning energy landscape, necessitating substantial investments in renewable and cleaner energy sources. While its extensive asset base and global reach provide stability, the company’s heavy reliance on fossil fuels poses long-term risks amid increasing environmental regulations and the global shift toward sustainable energy solutions. Investors seeking exposure to the energy sector acknowledge Exxon Mobil’s stability but must weigh its resilience against evolving market dynamics and the imperative for sustainable energy practices.
3. Canadian Natural Resources (CNQ)
- Industry/Sector: Energy/Oil & Gas Exploration & Production
- Market Cap: $55 billion
- P/E: 13
- EPS: $4.81
- Dividend Yield: 4.8%
Canadian Natural Resources Limited is an energy exploration and production company based in Canada. It’s one of the country’s largest independent crude oil and natural gas producers. CNRL’s operations encompass a diversified portfolio, including conventional and unconventional oil and gas assets. The company is interested in various projects across Western Canada, the North Sea, and Offshore Africa, contributing to its status as a significant player in the global energy market. Known for its focus on innovation and cost-effective operations, CNRL consistently optimizes its production processes and invests in technology to enhance efficiency and reduce environmental impact in its oil and gas exploration and extraction activities.
Canadian Natural Resources stands out as a prominent energy stock for 2024, largely due to its diverse portfolio spanning crude oil, natural gas and other energy resources. The company’s extensive reserve base and efficient operational strategies in the Western Canadian Sedimentary Basin contribute to its resilience in the energy market. CNQ is also committed to environmental sustainability and technological innovation, enhancing its long-term prospects. However, the company faces challenges related to commodity price volatility, regulatory shifts and environmental concerns surrounding fossil fuel extraction. Despite these risks, Canadian Natural Resources’ diversified asset base and focus on cost-effective operations position it as an attractive option for investors seeking exposure to the energy sector, provided they carefully consider market fluctuations and industry-specific challenges.
The brain trust at Forbes has run the numbers, conducted the research, and done the analysis to come up with some of the best places for you to make money in 2024. Download one of Forbes’ most popular and widely anticipated reports, 12 Best Stocks To Buy for 2024.
4. Pioneer Natural Resources
- Industry/Sector: Energy/Oil & Gas Exploration & Production
- Market Cap: $52 billion
- P/E: 11
- EPS (ttm): $21.69
- Dividend Yield: 6.3%
Pioneer Natural Resources is a leading independent oil and gas exploration and production company based in the United States. Renowned for its innovative approach to drilling and production technologies, Pioneer operates in prolific oil and gas regions, primarily in the Permian Basin, one of the world’s most significant oil-producing areas. The company’s strategic focus on horizontal drilling and efficient resource development has contributed to its strong growth and robust position in the industry. Pioneer is committed to responsible energy extraction practices while prioritizing operational excellence, technological advancements and sustainable environmental stewardship in its operations.
Pioneer will emerge as a prominent energy stock for 2024, mainly due to its robust oil and gas sector position. The company’s strategic focus on high-quality assets in the Permian Basin, one of the largest oil fields globally, establishes its strong foothold in the energy market. Pioneer’s commitment to technological advancements and operational efficiencies contributes to its competitive edge. However, the company faces potential drawbacks such as exposure to commodity price fluctuations, environmental concerns surrounding fossil fuels, and regulatory changes impacting the oil and gas industry. Despite these challenges, Pioneer’s proven track record in efficient operations and resource management makes it an appealing choice for investors seeking exposure to the energy sector, albeit with careful consideration of market volatility and industry trends.
5. NEXTracker (NXT)
- Industry/Sector: Renewable Energy/Solar Technology
- Market Cap: $2.6 Billion
- P/E: Around 21x
- EPS (TTM): $1.83
- Dividend Yield: None. NXT does not generally pay dividends.
Company Overview
Nextracker is a relatively new yet prominent solar energy player specializing in advanced solar tracker systems. These systems enhance the efficiency of solar installations by dynamically aligning solar panels with the sun’s trajectory, maximizing energy capture. Known for their robust, reliable designs and ease of installation, Nextracker’s products are popular in utility-scale solar projects globally.
NEXTracker has shown strong financial performance through 2023. Its management has issued positive earnings guidance for 2024, with an EPS (Earnings Per Share) guidance alluding to further growth. The Zacks Consensus Estimate for the company has increased by 0.7% over the past three months, reflecting growing optimism about Nextracker’s earnings prospects. The company’s Price-To-Sales ratio of 1.2 and its Price-To-Earnings ratio of 21 are below the industry average. The combination of strong financial performance and favorable analyst ratings make NEXTracker a compelling investment pick for 2024.
Diversify & Hold for Success
Diversification in energy stock investments offers several key benefits. Firstly, it helps mitigate risks associated with the sector’s volatility, as different energy stocks might respond differently to market conditions. For instance, balancing traditional oil and gas stocks with renewable energy companies can offset the impact of oil price fluctuations or regulatory changes. Secondly, diversification spreads the investment across various energy sources, reducing exposure to the vulnerabilities of any single energy sector. This approach allows investors to participate in multiple facets of the energy industry, potentially maximizing returns while managing risk. Lastly, diversification can aid in aligning investments with varying economic and environmental trends, ensuring a more resilient and adaptable portfolio in the face of industry shifts and developments.
A buy-and-hold strategy is often considered beneficial for long-term investors in the energy sector due to its inherent advantages. Cyclical market patterns, geopolitical factors, and technological advancements can influence energy stocks. By adopting a buy-and-hold approach, investors can weather short-term volatility and market fluctuations, allowing them to ride out the sector’s cycles. Moreover, this strategy aligns well with the long-term growth prospects of the energy industry, especially with the transition to cleaner energy sources, renewable technology advancements, and the potential for increased global demand. Holding onto well-performing energy stocks over extended periods can capture substantial value appreciation as the industry evolves, allowing investors to benefit from the sector’s growth trajectory.
Bottom Line
The article explores the top 5 energy stocks set for potential growth in 2024, emphasizing the significance of a diversified investment approach and the benefits of adopting a buy-and-hold strategy. It delves into each selected energy stock, highlighting its market positioning, growth prospects, and financial health, aiming to guide investors in making informed decisions. The piece underlines the necessity of diversification within the energy sector, balancing traditional oil and gas stocks with renewable energy companies and aligning with the industry’s evolving landscape. Moreover, it emphasizes the long-term benefits of holding onto energy stocks, offering insights into how a patient approach can capitalize on market fluctuations and industry advancements.
The brain trust at Forbes has run the numbers, conducted the research, and done the analysis to come up with some of the best places for you to make money in 2024. Download one of Forbes’ most popular and widely anticipated reports, 12 Best Stocks To Buy for 2024.