• August 12, 2022 03:06

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After a dramatic collapse, these U.S. stocks are at dramatic highs now, Get to know them.

Jun 30, 2021
After a dramatic collapse, these U.S. stocks are at dramatic highs now, Get to know them.

After a dramatic collapse, these U.S. stocks are at dramatic highs now, Get to know them.

In recent history, it is rare to see the energy market more prosperous than today. The energy sector’s shares are brilliantly driven by high oil prices. The price of oil jumped to three-year highs to $75 per barrel. In addition, demand increased following the beginning of the world’s liberalization of the COV restrictions and the return of the driving season during the summer, and oil is supported by declining production and declining oil inventories.

In fact, the continued rise in the commodity has raised renewed bets that crude oil prices could once again reach the key psychological level of $100 per barrel — a level not seen since before the oil crash in late 2014.

WTI Crude Chart

Nor is it surprising that one of the energy sector’s main ETFs — spdr S&P oil and gas exploration and production SPDR® S&P Oil & Gas Exploration & Production ETF (NYSE:XOP) — has risen nearly 62% so far to its best level since September 2019. Compare this to the S&P 500 performance, which for its part increased by only 14.2% over the same time frame.

Energy sector performance vs. S&P 500 performance

Given the current rising energy market, where crude oil prices are set to experience new highs, three energy sector stocks are well positioned to extend their march higher in the coming weeks and months.

 

1. OJ Resources company

  • Performance from the beginning of the year to date: + 65.1%
  • Market value: $48.1 billion

EOG Resources (NYSE:EOG) is one of the largest independent oil and natural gas companies in the United States. Its core business operations include exploration, development, production and marketing of crude oil, natural gas and natural gas liquids.

Shares of the Houston, Texas-based energy company — which owns luxury space in the Eagle Ford Shale Formation (NYSE:F) in South Texas and the Permian Delaware Basin — have also risen this year, rising about 65% so far in 2021.

Shares of the Houston, Texas-based energy company — which owns luxury space in the Eagle Ford Shale Formation (NYSE:F) in South Texas and the Permian Delaware Basin — have also risen this year, rising about 65% so far in 2021.

OJ shares also ended Tuesday’s session at $82.30, not far from an 18-month high of $87.99 on June 7. At current levels, it has a market value of $48.1 billion, making it the fourth largest oil producer in the United States, after Exxon Mobil Corp (NYSE:XOM), Chevron Corp (NYSE:CVX) and ConocoPhillips (NYSE:COP).

E.O.J. Arrow

OJ is expected to continue to benefit from improved oil market fundamentals in the coming months, bearing in mind that West Texas Intermediate, the U.S. crude index, approached $75 per barrel earlier this week, for the first time in more than two years.

The former low-cost shale oil producer also said it only needed oil at an average of $39 per barrel to maintain its current production rate. With oil prices currently well above this level, OJ is poised to generate significant free cash flow, giving it the funds to increase dividends, which currently yield nearly 2%, share buybacks and debt repayments.

AOJ, which reported mixed first-quarter financial results in early May but announced special dividends of $1.00, reported the following earnings on August 5.

The consensus also calls for a profit per share of $1.40 for the second quarter, improving significantly from a loss of $0.23 per share in the year-earlier period. Revenue is expected to reach $3.89 billion, up 253% from sales of $1.1 billion in the same quarter a year earlier, reaping the benefits of higher oil prices.

In addition to the final result figures, investors will be watching O.G.’s update regarding next year’s production targets and plans to return more liquidity to shareholders.

2. Occidental Petroleum (NAYEZ:Oxy)

  • Performance from the beginning of the year to date: + 80.8%
  • Market value: $29.2 billion

Occidental Petroleum (NYSE: OXY) is one of the largest oil and natural gas producers in the Permian Basin, making it a major player in the U.S. energy sector. The region, which extends across West Texas and southeast New Mexico, accounts for nearly 30% of total domestic oil production.

The Houston, Texas-based energy company, whose shares collapsed as the Covid-19 health crisis began at its peak last year, has also benefited, but as oil prices rebounded, they have risen about 81% since the beginning of the year.

Occidental Petroleum, which hit a pre-epidemic high of $33.01 on June 25, closed at $31.30 on Tuesday, bringing its market value to $29.2 billion.

Oxytdale Shares

Occidental is also preparing to continue to take advantage of its excellent operations in Permian, taking advantage of strong oil prices, which will help boost future profit growth.

Occidental, which reported better-than-expected financial results for the first quarter on May 10, also reported profit and sales after the U.S. market closed on August 9.

In addition to the final outcome figures, investors will monitor Occidental Petroleum’s update on its oil and gas production forecasts for the remainder of the year and beyond.

Investors will also be keen to see if the energy company, which borrowed heavily to finance the $38 billion acquisition of rival Anadarko Petroleum in 2019, plans to take further steps to reduce its high debt burden and return more liquidity to shareholders in the form of dividend payments and share buybacks.

3. Continental Resources

  • Year-to-date performance: + 127.5%
  • Market value: $13.6 billion

Continental Resources Inc ., (NYSE:CLR), is one of the nation’s leading independent oil and natural gas companies. Almost all of its reserves are located in Bakken Sayle Debussette in North Dakota and Montana, where the company is currently the largest oil shale producer in the region. It also has major drilling assets in Stack and Skoop’s rock plays in Oklahoma.

Shares of Oklahoma City-based energy company Oklahoma City outperformed the broader market by a wide margin this year, rising by about 128% amid the continued rise in oil prices.

Continental Resources – which rose to its best level since September 2019 at $39.73 late last week – was at $37.03 yesterday. At current levels, the market value of the oil exploration and production company is $13.6 billion.

Continental Resources Shares

Despite strong gains a year ago, Continental Resources remains one of the best buying stocks for investors who want to play a continued recovery in the U.S. oil sector, especially as crude oil prices continue to rise strongly.

The company’s earnings report will be released on July 28th after the market closes, and during the last quarter the company was able to record strong profits and revenues, and announced the resumption of dividends.

Analysts’ consensus indicates a share profit of $0.43 for the second quarter, compared to a loss of $0.71 per share in the same period last year. Revenue is expected to rise 500% compared to the same quarter a year earlier to $1.06 billion, thanks in large part to the dramatic recovery in crude oil prices.

In addition, shareholders will pay close attention to improvements in the company’s balance sheet, as it continues to reduce debt.

The focus will also be on Continental’s full-year production forecasts, as well as its free cash flow guidance. The shale oil producer previously also forecast cash flow of $3.1 billion from operations, up 30% from its previous guidance, providing it with cash flow to pay off debt, increase dividends currently making 1.20%, and buy back shares.