3 Stock up on energy for sale in April before it’s too late

The energy sector was the best performing sector in 2022 and in fact turned out to be the best performing sector overall. So far, 2023 has not turned out well for investors in this sector, with energy reserves fell by 4.23%, based on S&P Global 1200 Energy Index. These negative returns contrast poorly with the broader S&P 500which is up 7.5% year-to-date at the time of writing.

Nevertheless, there were standouts among them energy reserves which bucked the trend and generated solid returns. BP (NYSE:BP) and Marathon Petroleum (NYSE:MPC) in their ranks.

However, this list focuses on underperformers, particularly certain energy stocks that investors should sell. Now is the time to move out of these companies into better-performing energy stocks or other sectors, including technology.

Chesapeake Energy (CHK)

Source: Casimiro PT / Shutterstock.com

Chesapeake Energy (NASDAQ:CHK) was a solid stock in 2022. Like many energy stocks, it has had a strong year due to booming energy prices. The company mainly deals with natural gas, which increased significantly last year. This led to a more than doubling of revenue in 2022, reaching $11.74 billion.

This strong performance has caused CHK stock to rise from $66 to $94 in 2022. Of course, 2023 began as a completely different story. CHK stock has since fallen to around $75 per share at the time of writing.

The company’s forecasted production volume and expected energy prices are currently not in Chesapeake’s favor. In short, 2023 will not be a repeat of 2022, suggesting that investors should avoid or sell CHK stock now.

The company has provided guidance that production will be in 2023 volume likely to be lower than 2022 when it announced earnings in February. The US Energy Information Administration announced lower prices throughout 2023.

Of course, these aren’t the only factors driving Chesapeake stock prices. However, they are critical factors nonetheless. The company won’t generate 2022 revenue in 2023, which is a simple reason to avoid CHK stock now.

Devon Energy (DVN)

Source: Jeff Whyte / Shutterstock.com

Devon Energy (NYSE:VAT) had a great 2022, as did Chesapeake Energy and many other energy companies. High-level metrics indicate that DVN stock is investment grade, which is what the company has been called in the past.

Devon’s free cash flow more than doubles to $6 billion in 2022. In addition, the company’s oil production volume reached an all-time high in the fourth quarter 316,000 barrels per day. And for shareholders, its already high dividend is up 11% in 2023.

With these strong results, it’s hard to see why Devon Energy has seen its share prices decline in 2023. However, this is an example of past performance, which does not guarantee future returns. Devon Energy issue weak 2023 production expectations along with higher than expected capital expenditures. If a company’s revenue is expected to decrease while its expenses increase, the company will be more vulnerable. That’s where Devon Energy is right now because of these common factors.

Devon’s 10% dividend is very tempting, but investors should be careful. Such high returns tend to indicate significantly higher risk, which the market is now clearly pricing in for this stock.

ConocoPhillips (COP)

Source: JHVEPhoto / Shutterstock.com

Property ConocoPhillips (NYSE:COP) and its shareholders, were not strong this year. In 2023, COP stock was among a number of energy stocks that experienced declines. Much of this decline can be attributed to news of the Willow Project on Alaska’s North Slope.

That project has come under a lot of scrutiny, culminating in an environmental review by the Biden administration. The Ministry of the Interior was tasked with deciding whether to allow drilling, issuing its own Minutes of the decision March 13.

The decision rejected two of ConocoPhillips’ five proposed drilling sites, reducing its total footprint by 40%. COP shares fell immediately after the decision was announced. Even before the announcement of the decision, there was speculation about a reduced decision. These rumors also suggested that the economic viability of the project was questionable in such a scenario.

Time will tell what the financial results of the project are. However, a less than ideal outcome has materialized for ConocoPhillips. This is a good sign to stay away from COP stocks for now.

As of the date of publication, Alex Sirois 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.