Top-performing energy stocks this month include PDC Energy Inc., Coterra Energy Inc., and Texas Pacific Land Corp., which have risen as much as 101% in the past year amid volatility in global oil markets and the EU's plan to cut off supplies of refined fuel from Russia.
We look below at top energy stocks in three categories: best value, the fastest growth, and the most momentum. All data are as of Jan. 19, 2023.
Best Value Energy Stocks
|Best Value Energy Stocks|
|Price ($)||Market Capitalization (Market Cap) ($B)||12-Month Trailing P/E Ratio|
|PDC Energy Inc. (PDCE)||67.06||6.5||3.4|
|Ovintiv Inc. (OVV)||49.41||12.3||3.5|
|Southwestern Energy Co. (SWN)||5.73||6.3||4.2|
- PDC Energy Inc.: PDC is an oil, natural gas, natural gas liquids (NGLs), and production company. Its primary operations are in Colorado and West Texas.
- Ovintiv Inc.: Ovintiv is an oil and natural gas exploration and production company with operations in the U.S. and Canada.
- Southwestern Energy Co.: Southwestern explores and produces natural gas and NGLs in Pennsylvania, Ohio, West Virginia, and Louisiana. In the third quarter of 2022, Southwestern reported net income of $450 million compared with a net loss for the prior-year quarter. Revenues nearly tripled to $4.5 billion, driven by a surge in gas sales.
Fastest-Growing Energy Stocks
These are the top energy stocks as ranked by a growth model that scores companies based on a 50/50 weighting of their most recent quarterly year-over-year (YOY) percentage revenue growth and most recent quarterly YOY earnings-per-share (EPS) growth.
Both sales and earnings are critical factors in the success of a company. Therefore, ranking companies by only one growth metric makes a ranking susceptible to the accounting anomalies of that quarter (such as changes in tax laws or restructuring costs) that may make one figure or the other unrepresentative of the business in general. Companies with a quarterly EPS or revenue growth of more than 2,500% were excluded as outliers.
|Fastest-Growing Energy Stocks|
|Price ($)||Market Cap ($B)||EPS Growth (%)||Revenue Growth (%)|
|Coterra Energy Inc. (CTRA)||25.30||20.0||837.5||472.7|
|Phillips 66 (PSX)||104.38||49.3||1,130||48.7|
|Marathon Petroleum Corp. (MPC)||123.23||61.5||731.2||41.7|
- Coterra Energy Inc.: Coterra is an independent oil and gas exploration and production company with operations in the Permian Basin, the Marcellus Shale, and the Anadarko Basin.
- Phillips 66: Phillips 66 manufactures and transports energy products, and its businesses focus on midstream, chemicals, and refining.
- Marathon Petroleum Corp.: Marathon focuses on marketing and refining crude oil products, and it also transports and stores product. On Jan. 4, Marathon announced that it had received a mini-tender offer by TRC Capital Investment Corp. to purchase up to 1.5 million shares of company stock at $105.00 each. Marathon recommended that shareholders reject the offer.
Energy Stocks With the Most Momentum
These are the energy stocks that had the highest total return over the past 12 months.
|Energy Stocks With the Most Momentum|
|Price ($)||Market Cap ($B)||12-Month Trailing Total Return (%)|
|Texas Pacific Land Corp. (TPL)||2,090.75||16.1||101.0|
|Occidental Petroleum Corp. (OXY)||65.67||59.7||84.8|
|Marathon Petroleum Corp. (MPC)||123.23||61.5||72.3|
|Energy Select Sector SPDR ETF (XLE)||N/A||N/A||45.3|
- Texas Pacific Land Corp.: Texas Pacific, one of the largest landowners in Texas, is a resource management company that gets most of its revenue from oil and natural gas royalties. Texas Pacific also operates water services in the Permian Basin.
- Occidental Petroleum Corp.: Occidental explores for and produces oil, NGLs, and natural gas. It also transports and stores oil and natural gas and manufactures basic chemicals and vinyls. The company's latest dividend of $0.13 per share was paid Jan. 17, 2023.
- Marathon Petroleum Corp.: See company description above.
What the Supreme Court's EPA Ruling Means for Energy Stocks
In June 2022, the U.S. Supreme Court ruled to restrict the Environmental Protection Agency's (EPA) ability to limit carbon emission outputs from power plants. Instead, the EPA must now gain congressional approval before enacting sweeping climate change regulations. The decision targeted the Obama administration's Clean Power Plan (CPP), which had called for energy players to curb emissions by 32% from 2005 levels by 2030. Under the CPP, the EPA had the authority to remake the U.S. power system, shifting from fossil fuels to cleaner energy alternatives.
The ruling removes potential EPA regulatory challenges for coal, oil, and gas stocks that have already performed strongly in 2022 amid surging energy demand in the wake of the pandemic and the Russian invasion of Ukraine. However, the decision may present challenges for renewable energy stocks, many of which have struggled to gain traction despite clean energy being an integral part of Biden's policy agenda.
It remains unclear how much long-term upside the ruling will deliver fossil fuel producers, given the clear move worldwide to renewable clean energy. Moreover, many utilities already have implemented EPA environmental regulations, especially where it has made economic sense.
Advantages of Investing in Energy Stocks
Two key reasons to invest in the energy sector are the size of the market and the sector's recent returns.
Size of the Market: Given that the world relies on energy to power everything from cars to factories and just about all else in between, it's not surprising that the value of the global energy market in recent years has been calculated at around $7 trillion. Furthermore, the International Energy Agency (IEA) expects global energy demand to grow by more than 30% by 2035. The energy market also offers many industries to invest in, including exploitation, storage, renewables, production, transportation, and distribution.
Recent Returns: The trend is your friend, as they say on Wall Street. No sector epitomizes this saying more than energy stocks over the past year. The group leads every other area of the market by performance, having returned nearly 30% over the past 12 months as of January 2023.
The comments, opinions, and analyses expressed herein are for informational purposes only and should not be considered individual investment advice or recommendations to invest in any security or adopt any investment strategy. While we believe the information provided herein is reliable, we do not warrant its accuracy or completeness. The views and strategies described in our content may not be suitable for all investors. Because market and economic conditions are subject to rapid change, all comments, opinions, and analyses contained within our content are rendered as of the date of the posting and may change without notice. The material is not intended as a complete analysis of every material fact regarding any country, region, market, industry, investment, or strategy.
YCharts. "Financial Data." (Subscription required.)
Financial Times. "Oil Market Braces for Fresh Turmoil as EU Prepares to Cut Off Russian Diesel."
Southwestern Energy Co. "Southwestern Energy Announces Third Quarter 2022 Results."
Marathon Petroleum Corp. "Marathon Petroleum Corp. Recommends Shareholders Reject Mini-Tender Offer From TRC Capital Investment Corp."
Occidental Petroleum Corp. "Occidental Announces Dividend."
Business Insider. "Supreme Court Ruling Dials Back EPA Powers: What It Means for Energy Stocks."
Dummies. "10 Reasons to Invest in Energy."