2 top energy stocks to consider for your smart wallet

AAt this point in this tumultuous year, it would be nice if investors had a comprehensive tool that would allow them to benchmark their own portfolio of stocks against the portfolios that are generating the most gains. TipRanks’ Smart Portfolio tool does just that.

Essentially, the Smart Portfolio tool allows investors to get a better idea of ​​how their portfolios are performing compared to the top performing portfolios on TipRanks. This way, they can rearrange their portfolios to ensure optimal returns.

The tool helped us see that with a sector allocation of 50.11%, the technology sector is still the favorite among the best performing portfolios on TipRanks.

However, since the start of the Russian-Ukrainian war, the energy sector has been in the spotlight, benefiting from soaring oil and energy prices. Despite a recent decline in oil prices amid growing fears of a recession, many experts believe that the impact of any recession will have little impact on the energy sector.

Obviously, it makes sense to use this trend to discuss stocks in this sector. So, using the Smart Portfolio tool, we’ve sorted out two stocks in the energy sector that are worth considering.

Let’s get straight to the point without further ado.

Exxon is a big name in the energy sector, engaged in the exploration, development and distribution of oil, gas and petroleum products.

Earlier this month, Exxon filed an 8-K report that showed remarkable earnings and cash flow thanks to exceptionally wide oil refining margins.

Following the SEC filing, Bank of America Securities analyst Doug Leggate reiterated a buy rating and price target of $128. Encouraged by the numbers reported in the 8-K, Leggate raised its second-quarter EPS estimate to $4.01 from $3.11. He also thinks free cash flow will increase by around 60% from the fourth quarter of 2021.

“Note that XOM has changed the reporting segments to include Energy Products/Chemicals and Specialties (vs. Downstream and Chemicals previously); but the net result remains that the sequential orientations are dominated by a strong sequential increase in realized refining margins – up $5.4 billion quarterly – quarter-on-quarter,” the analyst said.

Most Wall Street analysts are bullish on Exxon, with the stock having a strong buy consensus rating based on 11 buys and three holds. The average price target for Exxon is $109.33, which is up 29.3% from current price levels.

The other energy stock that helps top performing portfolios on TipRanks build wealth is Chevron, which is involved in the exploration, development, and production of crude oil and natural gas. Natural gas liquefaction, transportation of crude oil and liquefied natural gas, and petroleum refining are also part of Chevron’s extensive business.

Besides the tailwinds of being in the hot energy sector, the company’s relatively strong balance sheet is a huge draw for investors. Although the company’s balance sheet carries net debt, it is not surprising to be in an industry that requires heavy investment and financing.

Additionally, its leverage ratio, which measures how leveraged the company is, is relatively modest at around 20% in 2021, compared to the industry average of around 49%.

Additionally, the company also has the security of a high investment grade rating of AA from S&P Global (SPGI), which helps keep Chevron’s borrowing rates low.

The points above reflect the discipline in capital spending followed by the energy major, and this should help the company manage any volatility in commodity prices by efficiently generating desirable cash flow, even in a unstable business environment.

Recently, in light of a possible recession and other near-term macro concerns, Truist Securities analyst Neal Dingmann reiterated a Hold rating on Chevron, but cut his price target to $170 from $181. $.

The analyst expressed optimism about the near-term growth of the company, generating low-cost Permian projects. He said he still sees a “significant Permian production ramp that includes associated gas volumes, as well as the two recent LNG deals that are expected to deliver higher net gas revenues than their peers assuming prices international markets are attractive”.

Chevron currently has a Moderate Buy consensus rating on Wall Street, based on seven buys, six holds and one sell. The average price target on Chevron currently stands at $179.79, which reflects upside potential of 30.6% from its current price.

Conclusion – These stocks can contribute to the performance of your portfolio

Even though the tech sector holds most of TipRanks’ investor money, the two oil stocks are among TipRanks’ best performing portfolios. This makes them worthy of consideration if one wants to add value to their current portfolio.


The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.


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