It’s been a stellar year for energy stocks. With oil prices rising above $120 a barrel and continuing to trade in a range between $85 and $105, energy companies are reaping record profits and generating incredible earnings.
A number of energy companies posted net profits that rose more than 3,000% year over year. All of this represents a windfall for an industry that was decimated during the pandemic when oil prices ended 2020 below $50 a barrel.
The strong earnings have led to better results among energy stocks this year, with many stocks rising 25%, 50%, even 100%. Oil stocks were the only bright spot in an otherwise dismal year for stocks.
While some analysts continue to debate whether oil prices have peaked, the consensus view is that oil company profits will remain strong through the end of this year. With that in mind, here are seven energy stocks poised for a jump in earnings in the third quarter.
|PXD||Pioneer Natural Resources||$228.00|
For this year’s second quarter, ExxonMobil (NYSE:XOM) reported that its revenue rose 69% year-over-year to $111.99 billion.
The net profit in the period from April to June amounted to a record $17.85 billionwhich is 281% more than the previous year.
His Earnings in the second quarter per share was $4.21, a 283% annual growth rate. With oil prices remaining around $85 a barrel, there’s a good chance ExxonMobil can do that again when it reports third-quarter earnings on Nov. 4.
Strong financial performance and an optimistic outlook have sent XOM stock tumbling this year, gaining 46% to $92.72 per share. ExxonMobil also pays a hefty quarterly dividends that yields 3.79% for a payout of $0.88 per share.
The company also impressed investors with its buyback plan $30 billion of treasury stock this year and next year. If all that wasn’t enough, ExxonMobil is also cutting costs, with plans to save $9 billion in annual costs by 2023.
As a result, the company has lowered its breakthrough oil price to 41 dollars per barrel. So if oil prices stay above $80 a barrel for an extended period of time, that should result in a further windfall in ExxonMobil.
Occidental Petroleum (OXY)
There continues to be speculation in the media that Buffett’s holding company, Berkshire Hathaway (NYSE:BRK-B), may eventually purchase 100% of Occidental Petroleum. Buffett won regulatory approval purchase up to 50% of OXY stock let him decide on it.
Due to increased oil prices, the OXY share was one of the energy stocks that burned this year. up more than 100% since January. The stock has been one of the top performers in the S&P 500 year to date. OXY also got a lift on strong earnings reports.
In the second quarter of this year, Occidental Petroleum reported $10.68 billion in revenue, up 79% year over year. The company’s net profit was $3.76 billion, an incredible year-over-year increase of 3,546%. Earnings per share of $3.47 were up 3,570% year over year.
No wonder the Oracle of Omaha loves this stock.
Chevron (NYSE:CVX) profit also increased this year, as oil prices hovered around USD 100 per barrel.
The company reported that it is profit in the second quarter more than tripled from the same period in 2021 to $11.6 billion as its revenue rose to $65 billion from $36 billion a year earlier.
The second-quarter results translated to earnings per share of $5.95, a 272% year-over-year increase. Chevron made stellar earnings possible increase its share buyback programwhich announced it would buy back up to $15 billion of its own stock.
Chevron’s strong earnings were driven by April-June sales numbers. During this period, a barrel of crude oil and natural gas liquids averaged $89, up 65% from a year ago.
While CVX shares haven’t seen as much growth this year as OXY shares, they’ve managed to gain about 30% since January.
A price-to-earnings ratio of 10.38 makes the stock undervalued compared to peers. His 3.66% quarterly dividend yield it is also tempting. Perhaps unsurprisingly, Chevron is the only energy stock that Warren Buffett was buying this year.
Devon Energy (DVN)
Devon Energy (NYSE:VAT) is another energy stock that we can expect to cash in on its next earnings release.
In the second quarter, the company reported $5.58 billion in revenue, which is 79% more than the year before. Its net income of $1.93 billion and EPS of $2.93 were up more than 650% year-over-year, while its operating income of $2.56 billion was up 702% year-over-year. levels.
Extremely strong press has helped DVN stock gain around 40% this year. With oil prices continuing to hover above $85 a barrel, we can expect Devon Energy to once again post strong earnings for this year’s third quarter.
In addition to its strong balance sheet, investors also like that Devon Energy pays one of the best quarterly dividends around, currently yielding 7.22%.
However, Devon Energy stock actually has an annualized return of more than 10% because it is fixed plus variable dividend. This means that the basic dividend is supplemented by the payment of a variable dividend of up to 50% of the company’s free cash flow.
Currently, Devon Energy has one of the highest dividend yields among companies listed on the S&P 500. Companies the price-to-earnings ratio is a low 8.19.
Pioneer Natural Resources (PXD)
Pioneer Natural Resources (NYSE:PXD) stock has gained 23% this year and is currently trading at $230 per share. However, PXD stock is currently available 20% below 52-week highwhich presents a “buy the dip” opportunity for savvy investors.
It would definitely be wise to buy the stock before the company’s third quarter results are announced. V second quarter, Pioneer reported that its revenue rose 64% year-over-year to $7.01 billion. Net income of $2.37 billion was up 524% from Q2 2021, and EPS of $9.31 was up 505% year-over-year.
Other bullish reasons for PXD’s profit-oriented stock include a P/E ratio of 9.54 and a hybrid dividend that yields 11.03%.
The company is also the largest landowner in Texas’ oil-rich Permian Basin and has announced plans to a $1 billion buyback of its own shares. Not too shabby.
Over the past 12 months, Pioneer Resources stock has rallied 55%, driven by strong oil and natural gas prices and equally strong financial results.
Kinder Morgan (KMI)
Kinder Morgan (NYSE:KMI) is slightly different from the other names on this list as it focuses on oil and gas pipelines.
Today, 40% of U.S. natural gas volumes and 50% of all U.S. gas exported to foreign jurisdictions travel through Kinder Morgan’s network of 83,000 miles of pipelines and terminals.
Business for Kinder Morgan has been as exciting as you’d expect this year. As a result, KMI stock is up more than 8% over the past 12 months.
For the second quarter, which runs from April to June, Kinder Morgan reported revenue of $5.15 billion, a 64% increase over the same period in 2021.
The company’s net income was $635 million in the second quarter, a 184% year-over-year gain. Investors reacted positively to the numbers and theirs 6.22% quarterly dividend. In addition to the pipelines it operates, Kinder Morgan has announced plans to diversify and expand to renewable natural gas they move on.
Marathon Oil (MRO)
This year so far Marathon oil (NYSE:MRO) stock increased by almost 50%. It only pays a 1.25% dividend, but its earnings are growing rapidly this year.
In this year’s second quarter, Marathon Oil reported revenue of $2.18 billion, which is 73% more than the year before. However, the company’s net profit recorded a staggering year-on-year growth of 5,938%. Equally impressive was Marathon’s EPS of $1.37, up 6,750% from Q2 2021. The company’s profit margin was 44%, up 3,390% year over year.
While it may seem difficult to imagine that Marathon Oil can repeat its third-quarter earnings success, it appears that the company will once again beat expectations.
Analysts at Piper Sandler (NYSE:PEPPER) raised the target price on MRO stock at $41.00 and issued an “overweight” rating on the stock. If Piper Sandler’s prediction turns out to be correct, it would mean a 64% increase in Marathon Oil’s share price over the next 12 months.
As of the date of publication, Joel Baglole did not hold (directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer and are the subject of InvestorPlace.com Publishing Guidelines.