Capitalize on Oil's Ascent With These 3 Highly-Ranked Stocks
The oil market is experiencing a resurgence, with crude prices surging due to production cuts by Saudi Arabia and Russia. Over the past three months, the Oil/Energy sector has outperformed appreciably, yielding an 12.9% total return compared to the S&P 500's 0.8% loss.
WTI crude hit a 10-month high above $90 recently. While higher oil prices typically mean increased profits for oil companies, the sector's volatility requires careful investment. Considering the commodity’s unpredictable nature, it's advisable to consider top-rated, affordable stocks with favorable risk-reward profiles.
In this context, we highlight CVR Energy CVI, Solaris Oilfield Infrastructure SOI and Profire Energy PFIE. With the expectation of strong forward returns, we advise investors to add them to their portfolio.
CVR Energy: Let’s start with CVR Energy, established in 2006. It is a holding company primarily involved in renewable energy, petroleum refining, marketing, and nitrogen fertilizer manufacturing through its stake in CVR Partners. It's committed to developing renewable biofuels and actively participating in the energy transition to reduce carbon emissions.
Notably, CVI belongs to the Zacks Oil and Gas - Refining & Marketing industry, which carries a Zacks Industry Rank #83 — placing it in the top 34% of around 250 Zacks industries. Reflecting its solid industry rank and positive outlook, CVR Energy's annual earnings estimates have surged 38.8% for 2023 and 18.3% for the following year over the last 60 days.
Despite an expected dip in earnings per share to $5.80 this year from $6.04 in 2022, CVI is an attractive option, trading at $34.07 and a low 6.08X forward earnings. This valuation is lower than the industry average of 7.20X and well under the S&P 500's 20.59X.
CVR Energy's rising earnings estimates indicate that the stock is undervalued, offering investors a compelling opportunity. Additionally, with a year-to-date increase of 9.8%, CVI provides an impressive 5.9% dividend yield, making it an attractive choice for income-seeking investors. Overall, the Zacks Rank #1 (Strong Buy) company appears well-positioned for growth and profitability, supported by its strong industry rank and strategic focus on renewable energy.
You can see the complete list of today’s Zacks #1 Rank stocks here.
Solaris Oilfield Infrastructure: Next up is Solaris Oilfield Infrastructure. SOI specializes in providing essential services and systems to support oil and gas well drilling operations, particularly in major U.S. unconventional basins. Their offerings include management systems for handling critical materials like chemicals and proppant during well construction, optimizing supply-chain efficiency.
Headquartered in Houston, TX, Solaris' stock is an exciting investment option, with expectations of steady top and bottom-line growth. Earnings are projected to increase by 25% in 2023 and a substantial 104.7% in 2024, reaching $1.94 per share.
On the revenue front, sales are predicted to inch up 0.5% in the current year and then surge by 21.2% in 2024, reaching $389.7 million. What makes this growth even more appealing is SOI's stock, which offers an attractive 4.2% dividend yield. It's currently trading at a forward earnings multiple of 11, considerably lower than the industry's average of 16.82.
Although the #1 Ranked stock has seen modest gains of just 1% in 2023, trading at around $10 per share, its potential for an upward move is becoming increasingly likely, especially with its strong growth prospects and compelling valuation.
Profire Energy: Lastly, Profire Energy’s stock offers valuable exposure to the rising oil sector as it provides products and technologies that enhance the efficiency, safety and compliance of energy companies, primarily in the upstream, midstream and downstream transmission segments of the oil and gas industry in North America.
PFIE holds a Zacks Rank #2 (Buy) and shows strong potential for both top and bottom-line growth. The stock currently trades below $3 and at an attractive forward earnings multiple of 11.39X, presenting a significant discount compared to the Zacks Oil and Gas - Mechanical and and Equipment industry's average of 35.86X and the market benchmark.
Additionally, PFIE's earnings are projected to surge by an impressive 187.5% in 2023 and increase by another 2.2% in 2024, reaching 24 cents per share. Despite a significant rise of 146.2% in the stock's value this year, there appears to be further growth potential, making it an appealing choice for investors.
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CVR Energy Inc. (CVI) : Free Stock Analysis Report
Profire Energy, Inc. (PFIE) : Free Stock Analysis Report
Solaris Oilfield Infrastructure, Inc. (SOI) : Free Stock Analysis Report
