Keep a Tab On These 3 Broker-Recommended Energy Stocks
The Energy sector is notorious for its inherent unpredictability, marked by sudden positive surges and downturns. While significant price swings have always characterized investments in oil and natural gas, the degree of uncertainty has markedly risen in recent years, especially following the COVID-19 pandemic.
For novice investors, energy market volatility makes investing a precarious and panicky activity. However, stocks like Halliburton HAL, Valero Energy VLO and Targa Resources TRGP are definitely worth a look, given brokers’ confidence in them. Although these companies currently carry a Zacks Rank #3 (Hold) each, brokers are expressing optimism about them, suggesting underlying positive trends.
You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Why is it Desirable to Follow Expert Opinion?
The volatility and uncertainty of oil prices make investment decisions difficult for individuals. With the future direction of the commodity’s movement being anybody's guess, it might be a wise decision to go ahead with stocks preferred by analysts who have deep fundamental knowledge and understanding of the industry and its companies.
Stocks with brokerage upgrades are often in for a good day and probably more. Consequently, a downgrade may indicate rough days ahead. Whatever the movement, the market tends to react to it. Also, research shows that stocks with broker rating upgrades outperform those that aren't upgraded and they almost certainly record better results than those stocks that get downgraded.
3 Broker-Favored Stocks Worth Keeping on One’s Radar
With the help of the Zacks Stock Screener, we have selected three stocks that have been given a Strong Buy/Buy rating by 75% or more brokers.
Halliburton: Houston, TX-based Halliburton is one of the largest oilfield service providers in the world, offering a variety of equipment, maintenance, and engineering and construction services to the energy, industrial and government sectors.
Investors should know that 17 of the 20 brokers providing data to Zacks on Halliburton’s stock have Strong Buy recommendations. The other three ratings are two Buys and one Hold, giving the company an attractive average brokerage recommendation (‘ABR’) of 1.17 on a scale of 1 to 5 (Strong Buy to Strong Sell).
Annual earnings are forecast to go up 9.6% this year and rise another 16.8% in 2025 to $4 per share. Moreover, sales are projected to climb 5.7% in 2024 and rise another 8.2% in 2025 to $26.3 billion. Finally, the average price target of Zacks is pegged at $47.40 a share, which suggests a 23% upside for HAL stock from the current levels. So far this year, Halliburton stock is up a modest 6%, with an upside looking more likely.
Valero Energy: San Antonio, TX-based Valero Energy is the largest independent refiner and marketer of petroleum products in the United States. The company has a refining capacity of 3.1 million barrels per day across 15 refineries located throughout the United States, Canada and the United Kingdom.
Valero’s stock has catapulted nearly 32% this year. The company’s performance continues to impress, moving past its Zacks average price target of $151.20 by roughly 13% at the moment after climbing more than 22% over the last month alone.
Even after such an extensive rally, VLO’s stock has only one Strong Sell broker rating, with 13 of them still strongly recommending the company’s shares. Even after including three hold ratings, Valero’s 1.59 ABR is still intriguing. As far as earnings are concerned, VLO’s fourth-quarter earnings of $3.55 per share beat the consensus estimate of $2.95 a share by 20.3%.
Targa Resources: Targa Resources is a premier energy infrastructure company. A leading provider of integrated midstream services in North America, this Houston, TX-based operator primarily derives its revenues from gathering, compressing, treating, processing and selling natural gas.
An under-the-radar energy stock, TRGP has a very favorable ABR of 1.06. Currently, 16 brokers have a Strong Buy rating on Targa Resources’ stock with one Buy rating. The company has gained 12.3% year to date.
Total sales are projected to jump 22.4% in 2024 and leap another 10.5% in 2025 to $21.7 billion. Earnings are anticipated to rise 55.5% this year and jump another 18.2% in 2025 to $6.72 a share.
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Halliburton Company (HAL) : Free Stock Analysis Report
Valero Energy Corporation (VLO) : Free Stock Analysis Report
Targa Resources, Inc. (TRGP) : Free Stock Analysis Report
