3 Zacks Rank Additions Energy Investors Can Buy Right Now
The Oil/Energy sector has experienced a remarkable surge in recent months, primarily driven by a combination of supply constraints and geopolitical factors. A significant contributor to this phenomenon has been Saudi Arabia's decision in June to unilaterally cut its oil production by 1 million barrels per day. Originally planned as a temporary measure through August and September, this reduction has now been extended throughout the entirety of 2023, playing a pivotal role in driving oil prices.
In response to these developments, the price of WTI oil recently climbed to over $95 per barrel, reaching its highest intraday level since August of the previous year. Despite concerns surrounding high inflation and slowing economic growth, the tightening supply outlook has overshadowed these worries.
This resurgence in the commodity market has reignited investor interest in energy stocks. However, the vast array of options can make it challenging to identify the most promising investments.
Fortunately, the Zacks Rank offers investors a straightforward and proven quantitative methodology for selecting high-performing stocks. The list of Zacks Rank #1 (Strong Buy) stocks highlights companies currently experiencing upward revisions in their earnings forecasts, a factor that significantly enhances their short-term performance.
You can see the complete list of today’s Zacks #1 Rank stocks here.
Three noteworthy additions to the Zacks #1 Rank list in the energy sector over the past few days are Patterson-UTI Energy PTEN, APA Corporation APA and HF Sinclair DINO. These energy stocks stand out due to their robust earnings revisions and strong buying momentum, making them compelling options for investors seeking to capitalize on the sector's current momentum.
Patterson-UTI Energy
Patterson-UTI Energy's business benefits from its proprietary design and technologically advanced Apex rigs that can move faster than conventional rigs, drill quicker and are better suited to new-age drilling. Meanwhile, the company's acquisition of Pioneer Energy Services has boosted its scale and geographic presence. Further, following the September 2023 merger with NexTier Oilfield Solutions, Patterson-UTI has become a leading provider of drilling and completions services in the United States.
PTEN has seen analysts revise earnings estimates higher over the last couple of months. Current-year earnings estimates have been upgraded by 2.7% and are projected to jump 133.9% year over year to $1.52 per share. Earnings estimates for 2024 haves been revised higher by 16.7% over the last 60 days and are expected to grow 10.3% year over year to $1.68 per share.
Valuation-wise wise too, Patterson-UTI is an attractive option, trading at a low 8.35X forward earnings. This is significantly lower than the industry average of 66.49X and under the S&P 500's 19.79X.
APA Corporation
It is one of the world's leading independent energy firms engaged in the exploration, development and production of natural gas, crude oil and natural gas liquids. Geographically, the company’s operations are in the United States, Egypt and the North Sea of the United Kingdom. APA also holds acreage in offshore Suriname (South America) and other international locations.
Being a top-ranked stock, APA’s earnings expectations are crawling up across the board. Over the last 60 days, 2023 earnings estimates have been revised higher by 14.9% to $4.64 per share, while next year’s estimates have increased by 19.2% to $6.28 per share.
For those interested in valuation, APA currently trades at an attractive forward earnings multiple of 8.26X, presenting a discount compared to the Zacks Oil and Gas - Exploration and Production - United States industry's average of 9.83X and the market benchmark.
HF Sinclair
It is a producer and marketer of gasoline, diesel fuel and other specialty products. DINO owns and operates refineries located in Kansas, Oklahoma, New Mexico, Wyoming, Washington and Utah. Headquartered in Dallas, TX, HF Sinclair has greatly benefited from above-normal refining margins due to the Ukrainian crisis, leading to strong earnings and operational performance.
Earnings estimates for the company have been on the rise. Over the past two months, current-year earnings estimates have been increased by 25.6% to $10.36 per share, while the estimates for 2024 have been raised by 19.7%.
Furthermore, HF Sinclair is attractive at 5.07X forward earnings and offers a generous 3.43% dividend yield which towers over the S&P 500’s 1.50%.
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Patterson-UTI Energy, Inc. (PTEN) : Free Stock Analysis Report
APA Corporation (APA) : Free Stock Analysis Report
HF Sinclair Corporation (DINO) : Free Stock Analysis Report
