3 “heavy buying” oil stocks likely to shine in 2022
TThe year 2021 can be seen as a year of strong recovery for the oil market, with the S&P 500 index of the energy sector increasing by 50.6% last year.
The upward trend is expected to continue in 2022, driven by the global economic recovery and improved fuel consumption by end users. In addition, the recently unveiled massive $ 1 trillion infrastructure program could be an important driver for the US market, promoting higher crude prices.
Although the Omicron variant has recently raised concerns that the recovery in oil demand is slowing, those concerns are gradually dissipating as the strain is expected to be less dangerous than previously thought. At the same time, existing vaccinations can successfully neutralize it, which is a major plus.
In summary, oil stocks appear to be well positioned, with an improving macro environment and solid fundamentals.
In this context, investing in these leading oil stocks which have received a very consensual buy note from the experts could be rewarding. Additionally, TipRanks gives each of these stocks a “Perfect 10” stock analysis.
Chevron is one of the world’s integrated oil companies best positioned for long-term production ramp-up.
The company has one of the largest project portfolios in the industry, given its privileged position in the lucrative Permian Basin. With its purchases in the Permian and Marcellus basins, the organization positions itself as the second largest oil company in the United States.
Additionally, Chevron is considered one of the highest dividend paying stocks due to its strong financial position and cash flow generation capabilities. The company has sufficient liquidity to continue paying quarterly dividends to its shareholders, as it has done in the past. In the third quarter, the oil giant paid a dividend of $ 2.6 billion and generated $ 6.7 billion in free cash flow.
Last month, the company unveiled its investment strategy through 2022. It forecast $ 15 billion in capital and exploration spending, up 20% from 2021 levels. The announcement by Chevron an increase in its share buyback forecast to $ 3 billion to $ 5 billion per year is also positive.
Chevron’s growth outlook was also praised by Wall Street analysts, who gave the company a strong buy rating based on 14 buys and 3 takes. The Chevron stock average forecast of $ 135.06 represents an 11.2% increase in value from current levels.
EOG Resources, Inc. (EOG)
EOG Resources is a leading upstream energy company with operations in a number of lucrative areas such as the Permian Basin, which is the most prolific petroleum resource in the United States. The company’s operations are spread across the United States, China, Canada and Trinidad.
The company has strong growth potential, a large inventory of drilling prospects, strong returns and a well-disciplined management team. It owns extensive land in the oil shale areas, including the Permian, Bakken, and Eagle Ford. EOG Resources has many premium unexplored sites in Delaware.
Financially, EOG reported $ 2.16 in adjusted earnings per share in the third quarter, up 402.3% from the previous year quarter. Rising production volumes and rising raw material prices have fueled profitability.
EOG’s net income is expected to continue to benefit from higher oil prices and increased production.
As for the company’s dividend history, it increased the regular dividend by 82% to $ 3.00 per share. A special dividend of $ 2 per share was also declared.
Wall Street analysts gave EOG Resources a strong buy consensus recommendation, with 19 recent ratings, including 16 buys and 3 takes. The company is now trading at $ 95.35, with an average EOG price target of $ 115.05, implying a 20.7% gain from that point.
Natural Pioneer (PXD)
Another top pick on this list is Pioneer Natural Resources. The company is a leading upstream energy company specializing in the Permian Basin, the Eagle Ford Shale, the Rockies and the Western Panhandle.
The company recently completed a $ 3.1 billion sale of assets in the Delaware Basin, making it an outright operator in the lucrative Midland Basin.
In addition, Pioneer Natural is full of cash. During the third quarter, it generated $ 1.1 billion in free cash flow. Additionally, the company increased its quarterly dividend from 100% to $ 3.02 per share, which will be paid in the fourth quarter.
In addition, the production prospects for Pioneer Natural seem promising. Total production is expected to be between 613 and 619 MBoe / d in 2021, compared to 367.3 MBoe / d in 2020. Oil production is expected to be between 356 and 359,000 barrels per day.
On TipRanks, Pioneer Natural has a strong buy consensus rating, based on 15 buys and 5 holds. When it comes to price targets, the PXD stock price average forecast of $ 230.20 implies a potential upside of 20.4% from current levels.
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Disclosure: At the time of publication, Shalu Saraf does not have a position in any of the titles mentioned in this article.
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