Paying a flat fee on every trade is a thing of the past — if your current broker isn’t commission-free, consider finding a new one. ExxonMobil has focused its recent efforts on reducing its business costs and boosting efficiency. While the broader S&P 500 index is up by roughly 20% this year, the energy sector as a group has underperformed significantly in 2023. In contrast, oil stocks were some of the few shining stars during the bear market of 2022.
- Plus, the sector of the industry where the company works changes the way they operate and adjust to market shifts.
- Investors should understand both the upside and the concerns before jumping into the oil patch.
- There is quite a lot of growth potential in this sector, and you should keep your eye on the oil industry even as renewable energy becomes a powerful force worldwide.
- Thanks to its large-scale, vertically integrated operations, Phillips 66 is among the lowest-cost refiners in the industry.
Considerations When Buying Oil Assets
That means oil stocks remain relevant and potentially profitable. Devon Energy, based in Oklahoma City, is one of the largest independent exploration and production companies in North America. The firm’s asset base is spread throughout onshore North America and includes exposure to the Delaware, STACK, Eagle Ford, Powder River Basin, and Bakken plays. As a refinery versus an energy exploration company, Valero is more dependent on the “spread” between unrefined oil and higher-valued refined products that it takes to market. Interestingly enough, this means that the reduction in Brent crude oil prices from their 2022 highs of about $122 a barrel to just over $90 at present allows for lower input costs.
OPEC has wielded its power over the years, causing massive fluctuations in oil prices. The company has been a dividend growth superstar and a share buyback dynamo over the past decade. The company’s focus on making smart investments and returning cash to investors should enable Phillips 66 to continue enhancing shareholder value in the coming years. Enbridge has made significant investments in recent years in infrastructure geared toward cleaner energy, including offshore wind energy in Europe and hydrogen. These investments position Enbridge for the future of energy, even as it remains vital to supporting the oil market’s current needs. Enbridge’s pipeline operations generate stable cash flow backed by long-term contracts and government-regulated rates.
How to analyze oil stocks
Shell is a familiar brand to American motorists and indeed to consumers in 70 countries and territories globally. In fact, if it were a domestic stock it would be the third largest component of the S&P 500 energy sector— just behind giant $273-billion market capitalization Chevron (CVX). And in fiscal 2022, Shell’s $381 billion in total revenue was close behind the $399 billion posted by megacap leader Exxon Mobil (XOM).
- Devon Energy, based in Oklahoma City, is one of the largest independent exploration and production companies in North America.
- Like Valero, the refinery operations of DINO allow it to insulate itself from as much volatility as we’ve seen in firms that depend on the current market price of fossil fuels.
- These investments position Enbridge for the future of energy, even as it remains vital to supporting the oil market’s current needs.
In order to find the best oil stocks to buy now, we started by screening the S&P 500’s oil & gas sector for Wall Street analysts’ top-rated names. “Many U.S. consumers have indeed faced weakening finances in 2024, but their demand for crude oil products has proved resilient,” write Wells Fargo Investment Institute analysts Mason Mendez and John Laforge. “After a soft start to the 2024 driving season, U.S. crude oil demand has improved and is now in-line with its typically strong seasonal pattern.” They’re making waves with their pivot toward clean energy, but they’re not abandoning fossil fuels too fast. This hybrid strategy allows investors to ride out profits from traditional oil while positioning for renewables growth.
ConocoPhillips routinely boasts one of the highest credit ratings among E&P companies, backed by a low leverage ratio for the sector and lots of cash. ConocoPhillips is one of the largest E&P-focused companies in the world. Baker Hughes in its current form originated in 2017 from the merger of Baker Hughes with GE Oil & Gas. These developments ease concerns raised last month by the International Energy Agency, which warned that the global oil market could see a surplus of up to 4 million barrels per day next year. OPEC, however, expects supply and demand to remain broadly balanced over the same period.
Suncor Energy (SU)
Unlike some of the upstream-focused companies, Marathon Petroleum is one of the largest refiners in the U.S. That means they benefit when the spread between crude oil and refined product prices widens. Unlike the big integrated oil companies, COP focuses primarily on upstream activities—exploration and production. That means they’re all about digging and drilling, and in 2025, that’s working to their favor. A robust economy can support rising oil prices and oil producer profitability. However, geopolitics and capital allocation also play crucial roles in the industry.
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It is one of the largest midstream companies, with operations servicing most producing regions in the Lower 48 states. Enterprise is particularly dominant in the NGL market and is one of the few MLPs that provide midstream services across the full hydrocarbon value chain. TotalEnergies is an integrated oil and gas company that explores for, produces, and refines oil around the world. In 2020, it produced 1.5 million barrels of liquids and 7.2 billion cubic feet of natural gas per day.
Yes, with oil demand expected to remain strong and companies returning solid profits, oil stocks offer good dividend yields and potential for growth in 2025. They’ve pushed major investments into liquefied natural gas (LNG), which is seeing massive global demand. Plus, Shell’s scaling back risky exploration to focus on projects that generate quicker returns. ConocoPhillips benefits from scale and access to some of the lowest-cost oil on earth, which includes significant exposure to the Permian Basin.
They should focus on companies that can survive rough patches since they’ll be better positioned to thrive when markets turn healthy again. The company launched an industry-first, fixed-plus-variable dividend framework in 2021. It pays out as much as 50% of its excess cash flow each quarter via variable dividend payments after funding its fixed base dividend and capital expenses. Devon uses the rest of its excess cash to strengthen its balance sheet and repurchase shares. Finally, the company complements its low-cost portfolio with a top-tier balance sheet.
EOG Resources (NYSE:EOG)
If you’re of a certain age, you’ll recall the old Sinclair gas station signs with their iconic green dinosaur logo. The company has changed a great deal over the last few decades, however, through a series of mergers and corporate restructurings. Though perhaps not the first name you think of given its overseas operations and relatively modest market cap, Eni is nevertheless poised to deliver high octane results for investors. It is smaller than Shell but still ranks as one of the most dominant energy stocks in the world. It also stands out because of its qualitative strength, not just its size. When Warren Buffett takes a position in a stock, people pay attention.
Located heavily in the Permian Basin, EOG is admired for its ability to extract oil profitably—even when prices dip into the $40s per barrel. Optimize inventory, streamline production workflows, and reduce errors with real-time data and mobile solutions, enhancing efficiency and boosting profitability. Statistics or past performance is not a guarantee of the future performance of the particular product you are considering. Get stock recommendations, portfolio guidance, best oil stock and more from The Motley Fool’s premium services.
Even in a perfect work, this sector can be quite volatile as supply and demand are constantly shifting. That’s why it’s important to learn all you can about oil assets, how they can impact your portfolio and the manner in which petroleum maintains hold on the financial sector. OPEC, a cartel of oil-exporting nations that coordinates oil policies, plays a significant role in oil prices. By adjusting supply, OPEC can cause significant fluctuations in the price of oil. However, oil companies operating independently of OPEC can also impact prices through capital allocation decisions that affect supply. Investing in oil stocks can be risky due to the cyclical and volatile nature of the industry.