Top energy stocks for May include TORM PLC, YPF SA, and Vista Energy SAB de CV, which have soared by as much as 228% in the past year while the broader energy sector has performed about as well as the market.
The energy sector, as represented by the benchmark Energy Select Sector SPDR ETF (XLE), has fallen about 1% in the last 12 months, while the Russell 1000 Index is flat for the year.
We look below at top energy stocks in three categories: best value, fastest growth, and most momentum. All data below are as of May 5, 2023.
Best Value Energy Stocks
These are the energy stocks with the lowest 12-month trailing price-to-earnings (P/E) ratio. A low P/E ratio shows that you’re paying less for each dollar of profit generated. Profit can be returned to shareholders in the form of dividends and share buybacks.
|Best Value Energy Stocks|
|Price ($)||Market Capitalization ($B)||12-Month Trailing P/E Ratio|
|Southwestern Energy Co. (SWN)||4.74||5.2||0.8|
|Obsidian Energy Ltd. (OBE)||6.28||0.5||0.9|
|SilverBow Resources Inc. (SBOW)||22.60||0.5||1.0|
- Southwestern Energy Co.: Southwestern Energy is an oil and natural gas explorer and producer with properties in Pennsylvania, Ohio, West Virginia, and Louisiana. The company authorized in June 2022 a $1 billion share repurchase program that can continue through the end of 2023. Southwestern reported net income of $1.9 billion and a 28% year-over-year decline in revenue for the first quarter. Its stock has shed about a third of its value in the last year.
- Obsidian Energy Ltd.: Obsidian, formerly known as Penn West Petroleum Ltd., is a Canadian energy company exploring, producing, and developing oil and natural gas assets in the Western Canada Sedimentary Basin. In February, Obsidian appointed Stephen Loukas as permanent CEO after serving three years in the role on an interim basis. The company also said it would buy back up to 8.1 million shares in 2023. Obsidian's shares have fallen about 15% in the last year.
- SilverBow Resources Inc.: SilverBow is an oil and gas exploration, production, and development firm that focuses on properties in South Texas. The company's shares have shed about 30% of their value in the last year amid volatile oil prices.
Fastest-Growing Energy Stocks
These are the top energy stocks as ranked by a growth model that scores companies based on a 50/50 weighting of their most recent quarterly year-over-year (YOY) percentage revenue growth and most recent quarterly YOY earnings-per-share (EPS) growth.
Both sales and earnings are critical factors in the success of a company. Therefore, ranking companies by only one growth metric makes a ranking susceptible to the accounting anomalies of that quarter (such as changes in tax laws or restructuring costs) that may make one figure or the other unrepresentative of the business in general. Companies with quarterly EPS or revenue growth of more than 1,000% were excluded as outliers.
|Fastest-Growing Energy Stocks|
|Price ($)||Market Cap ($B)||EPS Growth (%)||Revenue Growth (%)|
|Black Stone Minerals LP (BSM)||15.60||3.3||N/A (see company description)||379.3|
|Archrock Inc. (AROC)||9.92||1.6||900.0||16.5|
|Chesapeake Energy Corp. (CHK)||78.64||10.5||N/A (see company description)||362.7|
- Black Stone Minerals LP: Black Stone owns oil and natural gas mineral interests in 41 states. The company's revenue surged on a year-over-year basis in the most recent quarter due to significant losses on commodity derivative interests in the first quarter of 2022. Black Stone does not have an EPS growth figure in the table above because EPS went from negative to positive over the period in question.
- Archrock Inc.: Archrock is a midstream natural gas compression and transport company for energy industry customers across the U.S. Total revenue growth for the last quarter was driven by gains in both contract operations and aftermarket services.
- Chesapeake Energy Corp.: Chesapeake is an oil and natural gas development and production company with operations in Louisiana, Pennsylvania, and Texas. Chesapeake's revenue climbed for the most recent quarter as a result of losses on natural gas and oil derivatives in the prior-year quarter. The company does not have an EPS growth figure above because EPS went from negative to positive over the period in question.
Energy Stocks With the Most Momentum
These are the energy stocks that had the highest total return over the past 12 months.
|Energy Stocks With the Most Momentum|
|Price ($)||Market Cap ($B)||12-Month Trailing Total Return (%)|
|TORM PLC (TRMD)||29.66||2.5||228.1|
|YPF SA (YPF)||11.39||4.5||175.1|
|Vista Energy SAB de CV (VIST)||20.41||1.9||143.3|
|Russell 1000 Index||N/A||N/A||-1.2|
|Energy Select Sector SPDR ETF (XLE)||N/A||N/A||-0.2|
- TORM PLC: TORM is a tanker company engaging in the transportation of oil products worldwide, while also developing and producing green marine equipment. Tanker stocks were given a boost last year by Russia's invasion of Ukraine, which prompted sanctions against Russia's energy industry and a surge in oil prices.
- YPF SA: YPF is an Argentine oil and gas company that is predominantly state-owned. It explores, produces, transports, refines, and sells a variety of oil and gas products. YPF's top- and bottom-line growth has been robust in recent quarters despite rampant inflation in Argentina.
- Vista Energy SAB de CV: Vista Energy is a Mexican oil and natural gas producer with properties in Mexico and Argentina.
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 $6 trillion. The energy market also offers many subindustries to invest in, including exploration, storage, renewables, production, transportation, and distribution.
Growth potential: The UN estimates the world needs to invest $2.4 trillion a year through 2035 in energy systems to achieve the Paris Climate Agreement goals. The global transition from fossil fuels to renewable energy presents investors with an opportunity to invest in upstart energy companies pursuing share in a huge market.
Risks of Investing in Energy Stocks
Energy stocks also come with potential downsides. Two industry-wide risks to consider are:
Shift away from fossil fuels: Climate change awareness and an increased focus on environmental, social, and governance (ESG) investing practices could threaten the viability of traditional energy companies over the longer term. The U.S. Environmental Protection Agency says that climate change could contribute to strains on the energy system, challenges with energy distribution, and disruptions to the overall energy industry, among other challenges.
Environmental accidents: Occasionally, energy companies may experience high-profile environmental accidents. These are not only damaging from a public relations perspective but can hamstring business as well. The April 2010 Deepwater Horizon oil well explosion and spill led BP Plc (BP) to pay over $6 billion in settlements in the subsequent two years.
Southwestern Energy Co. "Southwestern Energy Announces First Quarter 2023 Results."
Southwestern Energy Co. "Southwestern Energy Announces $1 billion Share Repurchase Program."
Obsidian Energy. "Obsidian Energy Announces Fourth Quarter and Full Year 2022 Results."
Black Stone Minerals LP. "Black Stone Minerals, L.P. Reports First Quarter Results."
Archrock Inc. "Archrock Reports First Quarter 2023 Results."
Chesapeake Energy Corp. "Form 10-Q for the quarterly period ended March 31, 2023."
YPF SA. "2022 & Q422 Consolidated Results."
U.S. International Trade Administration. "Energy Industry."
U.S. Environmental Protection Agency. "Climate Change Impacts on Energy."
Bloomberg. "BP Is Still Paying for the Deepwater Horizon Spill."
Environmental Protection Agency. "Deepwater Horizon – BP Gulf of Mexico Oil Spill."