These Oil Stocks Should Benefit From Continued Secular Tailwinds
Dividend Stocks We Like:
$Civitas Resources(CIVI)$ – 8% Yield
R $Riley Exploration Permian(REPX)$ – 5% Yield
$Suncor(SU)$ – 4% Yield
$Exxon Mobil(XOM)$ – 3% Yield
Growth Stocks We Like:
The oil industry remains attractive due to the steady growth in demand, particularly with China and Europe in recovery mode. Global demand for crude oil is expected to rise consistently, with a preference for crude oil over natural gas, especially in the United States. Natural gas supply tends to be affected by crude oil production, resulting in occasional oversupply. Despite recent weakness in natural gas, growing demand for crude oil is anticipated to influence stock prices positively.
On the supply side, the industry has underinvested, leading to the expectation of tightening supplies in the coming years. This, coupled with increasing demand, should drive prices higher, benefiting energy companies overall. Energy companies are currently trading at attractive valuations, as the market's anticipation of a peak in crude oil demand is being pushed further out. Additionally, global goals for reducing carbon consumption seem economically unfeasible, further supporting the demand for crude oil.
Most of the demand growth is occurring in the developing world, where consumption is lower than in the United States. As these regions use more energy, global demand continues to increase. Some recommended stocks include Civitas (CIVI), Riley Exploration Permian (REPX), Suncor Energy (SU), and Exxon (XOM). Exxon, in particular, is highlighted for its efficient business performance, integration of oil and natural gas production, and dividend payments.
Two other companies mentioned, Vital Energy (VTL) and Ring Energy (REI), do not pay dividends but are noted for their compelling valuations based on free cash flow multiples. It's emphasized that this is not investment advice but rather the speaker's strategy for their own accounts. Full disclosure is available on their website, and email alerts can be subscribed to for timely updates.
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- CornellRudolph·04-26VTL and REI also look promising based on their valuations.LikeReport