In an era where oil stocks continue to play a pivotal role in the dynamics of the global market, investors are increasingly keen to identify which entities stand out in March 2024. The reliance on the oil and gas sector, underscored by fluctuating oil prices and geopolitical tensions such as the Russian invasion, has made the analysis of oil company stocks more relevant than ever. With the U.S. leading in oil production and the demand for crude oil stocks showing no signs of waning, the landscape presents both challenges and opportunities for seasoned and novice investors alike. This comprehensive guide aims to delve into the intricacies of selecting the best oil stocks, offering insights into companies that are shaping the future of energy amidst evolving consumer sentiment and the looming shadow of artificial intelligence on the U.S. markets.
As the world grapples with the pressing need for sustainable energy solutions, the spotlight on gas and oil stocks intensifies. This article not only examines established giants in the petroleum stocks domain but also explores emerging players in the liquefied natural gas sector, revealing how they adapt to the oil price forecast and contribute to the U.S. oil production narrative. Key considerations such as share price movements, the impact of streaming services like Netflix and Reddit discussions on market sentiments, and the potential of AI stocks in enhancing oil industry operations are crucial. By navigating through the complexities of financial freedom and real estate implications, this guide offers a roadmap for investors aiming to make informed decisions in the ever-evolving landscape of oil stocks.
1. Chevron (CVX)
Chevron (CVX) stands out as a beacon for investors looking for stability and growth in the oil and gas sector. As a favorite of renowned investor Warren Buffett, Chevron has demonstrated a strong commitment to enhancing shareholder value. This is evident through its strategic share buybacks and an attractive dividend yield of 4.36%. The company’s recent move to acquire Hess in an all-stock deal valued at $53 billion, although under regulatory scrutiny, underscores Chevron’s aggressive growth strategy and its foresight in capitalizing on market opportunities.
- Key Financial Highlights:
- Dividend Yield: 4.36%, showcasing Chevron’s commitment to returning value to shareholders.
- Acquisition: In the process of acquiring Hess, signaling strategic growth.
- Analyst Ratings: A consensus price target of $180 suggests undervaluation, with Mizuho Financial setting a more optimistic target of $200.
- Stock Performance: Currently priced at $156.35 as of March 27, 2024, indicating a potential 29% upside according to Mizuho Financial.
- Future Projections: Expected production increase of 4% to 7% in 2024, with significant investments in LNG amid Europe’s energy needs.
Chevron’s strategic maneuvers, including the planned acquisition of Hess, are indicative of the company’s robust position in navigating the complexities of the oil market. The deal not only highlights Chevron’s appetite for growth but also reflects the industry trend of leveraging current oil valuations to expand asset portfolios. Financially, Chevron is poised for growth with forecasts showing an increase in production and a steady stream of affiliate dividends. The company’s commitment to organic capital expenditure, estimated to be between $15.5 and $16.5 billion in 2024, further emphasizes its dedication to sustainable growth and operational excellence.
Despite facing challenges such as a dip in stock performance in 2023 and missing analysts’ revenue expectations in Q4, Chevron’s long-term outlook remains promising. The company’s diverse energy assets and geographical presence are key to delivering shareholder value for decades. With a Real Value of 156.63 and a Target Price of 178.17, Chevron is positioned as a fairly valued investment. However, investors should note the current market position, with Chevron’s stock not considered a buy due to its performance relative to moving averages and a downtrend in its relative strength line. This nuanced perspective underscores the importance of a strategic approach to investing in Chevron, considering both its potential for growth and current market challenges.
Diamondback Energy (FANG)
Diamondback Energy (FANG) emerges as a formidable contender in the oil and gas sector, particularly appealing for investors eyeing the upcoming oil bull market. Despite a 28% increase in its share price over the last 12 months and its proximity to the top of its 52-week range, FANG remains a solid investment choice. The company’s focus is sharply on the Permian Basin, where it specializes in the production of oil and natural gas. This exclusive dedication underlines its strategic positioning in one of the most prolific oil-producing regions.
- Financial and Operational Highlights:
- Profitability: Diamondback Energy has reported net profit in 7 out of the last 10 years, showcasing its enduring profitability.
- Dividend Yield: The company boasts a 12-month trailing dividend yield of 4.31% and a forward dividend yield of 4.38%, with impressive dividend growth rates of 74.60% over the past three years and 93.80% over the past five years.
- Growth Rates: Revenue per share has surged by approximately 37.70% annually on average, with a 3-year EPS growth rate of about 88.50% and a 5-year EBITDA growth rate of 35.10%.
- Stock Performance: As of March 26, 2024, FANG’s stock closed at $194.70, reflecting a modest 0.15% change from the previous trading day.
The company’s strategic moves, including the proposed acquisition of Endeavour Energy Resources, although under regulatory scrutiny, demonstrate its ambition to expand and solidify its presence in the industry. Furthermore, Diamondback Energy’s commitment to dividend growth and its strong financial performance are indicative of its potential to deliver value to shareholders. The company’s operational focus on the Permian Basin, coupled with its ownership and operation of midstream infrastructure assets, positions it well to capitalize on the opportunities within the oil and gas sector.
Noteworthy is the company’s scheduled release of its first quarter 2024 financial results on April 30, 2024, which investors are keenly anticipating. With a market cap of $35.07B and a PE Ratio (TTM) of 11.34, Diamondback Energy stands as a significant player in the industry. The recent executive stock sales and the upcoming ex-dividend date on March 4th, 2024, for a cash dividend of 0.9 USD per share and a special dividend of 2.18 USD per share, further highlight the company’s active financial management and engagement with its shareholders.
2. Devon Energy (DVN)
Devon Energy (DVN) has experienced a notable dip in the stock market, with a decline of over 15% in the past 12 months. Despite this, the company’s forward P/E ratio of 8.9x suggests that the stock is currently undervalued, making it a potentially attractive option for investors. Analysts have set a price target of $53.20 on DVN stock, indicating a potential upside of 15%. This financial outlook is particularly interesting as Devon Energy prepares to release its first-quarter 2024 earnings report on May 1, 2024, after the U.S. financial markets close, with a follow-up conference call scheduled for May 2, 2024, to discuss the results.
- Financial Highlights and Future Plans:
- Operating Cash Flow: $1.7 billion in Q4 2023, marking the highest quarterly amount of the year.
- Earnings: Reported earnings of $1.2 billion and $1.81 per diluted share in Q4 2023, with adjusted earnings at $902 million or $1.41 a share.
- Investment Focus: Increased capital devoted to drilling and exploration in the Delaware Basin for 2024, including the addition of a fourth Delaware completion crew.
- Production: Achieved a record-setting crude oil output of 320,000 barrels per day in 2023, with expectations to average 650,000 barrels of oil equivalent per day (BOE/d) in 2024.
Devon Energy’s strategic emphasis on the Delaware Basin and the addition of a new completion crew underscore its commitment to bolstering its core operations. The company’s 2024 capital program, expected to be heavily weighted toward the first half of the year, aligns with its operational goals and production forecasts. Moreover, Devon’s impressive free cash flow of $2.7 billion last year enabled it to enhance shareholder value through dividends exceeding $1.8 billion and stock repurchases totaling $979 million. The fixed-plus-variable dividend of $0.44 per share, payable on March 28, 2024, further reflects the company’s robust financial health and dedication to its shareholders.
In terms of investor interest, Devon Energy Corp (NYSE:DVN) has caught the attention of 52 hedge funds as of the end of Q3 2023, highlighting its appeal in the investment community. The company’s strategic financial management, combined with its operational efficiency and focus on core exploration areas, positions Devon Energy as a compelling consideration for investors looking for undervalued opportunities in the oil sector.
3. Exxon Mobil (XOM)
Exxon Mobil (XOM) emerges as a standout choice for investors looking into oil stocks for March 2024. With the stock closing at $113.79 the previous day and a current price of $114.970 as of March 27, 2024, the company demonstrates a steady climb in its share price. Analysts have painted a bullish picture for Exxon Mobil, projecting an opening price of $106 in March 2024, peaking at $123, and dipping to a minimum of $104. The average price for the month is anticipated to be $112, with a closing forecast at $114, marking a 7.5% change. A strong buy rating from 11 analysts, who set an average forecast price target of $128.91 for the month, further supports this positive trend.
- Key Financial Indicators and Predictions:
- Future Price Prediction: Expected to reach $203.0119905745 after a year.
- Short-term Forecast: For the first 15 days of each month from April to August 2024, with a 5-Day Prediction at $115.54, indicating a 1.09% increase.
- Analysts’ EPS Forecast: Earnings per share (EPS) are expected to be $9.11 in 2024, $10.08 in 2025, and $11.21 in 2026.
- Market Sentiment: The stock is overbought on RSI14 but shows buy signals from both short and long-term Moving Averages.
- Insider Activity: In the last 100 trades, insiders bought 3.09 million shares and sold 2.29 million shares, showcasing a positive outlook.
Exxon Mobil’s strategic initiatives have set the stage for significant growth and expansion. The company reported an 18% growth in its operations in Guyana and the Permian Basin in 2023, highlighting its efficient production capabilities. A landmark move is the acquisition of Pioneer Natural Resources in an all-stock deal expected to close in the first half of 2024. This acquisition aligns with Exxon Mobil’s growth strategy, further solidifying its position in the industry. Additionally, the company’s strong financial health is evident through its forecast return on assets (ROA) of 11.81% and return on equity (ROE) of 21.71%, positioning it as a dividend king offering solid total returns as demand normalizes.
In summary, Exxon Mobil presents a compelling investment opportunity for those looking into oil stocks for March 2024 and beyond. The company’s strategic growth initiatives, coupled with favorable analyst ratings and financial forecasts, underscore its potential for robust performance in the oil and gas sector. Investors are advised to keep a close eye on Exxon Mobil’s stock movements and strategic developments, especially the anticipated acquisition of Pioneer Natural Resources, which could significantly impact its market position and financial performance.
4. Occidental Petroleum (OXY)
Occidental Petroleum (OXY) captures investor attention, notably with Warren Buffett’s Berkshire Hathaway making significant purchases throughout 2023. This move has increased Berkshire Hathaway’s stake to a notable 27%, making it a key player in OXY’s financial ecosystem. The company’s decision to reinstate its dividend in 2023 and further increase it by 20% in the first quarter of 2024 underscores its financial health and commitment to shareholder value. Currently, OXY is trading at $64.20, boasting a market capitalization of $56B, and has delivered a return of 1.39% as of March 27, 2024.
Key Financial and Operational Highlights:
- Dividend Increase: Reinstated in 2023 and increased by 20% in Q1 2024, reflecting strong financial management and shareholder commitment.
- Stock Performance: Trading at $64.20 with a 1.39% return as of March 27, 2024, and a market capitalization of $56B.
- Ownership Structure: Institutional ownership stands at approximately 52%, with Berkshire Hathaway being the largest shareholder at 28%. The top 5 shareholders collectively hold 53% of the company, indicating strong institutional confidence.
Innovative Ventures and Market Position:
- Acquisition of CrownRock L.P.: For $12 billion, expected to add around $1 billion to OXY’s free cash flow in the first year, subject to FTC approval. This strategic move may increase the average well decline rate but signifies aggressive growth and expansion efforts.
- Investment in Carbon Capture Technology: Positions OXY as a frontrunner in addressing regulatory and social risks, potentially providing a significant competitive advantage in the evolving energy sector.
- Market Volatility and Projections: The stock’s implied volatility suggests potential for high price swings, with an average daily movement of about 2.72%. Short-term trends indicate a weak rising pattern, yet there’s a 90% probability the stock price will range between $66.52 and $70.86 in the next three months. A recent buy signal from the 3-month MACD and support from accumulated volume at $60.47 further highlight potential for growth.
Occidental Petroleum’s strategic initiatives, including significant acquisitions and investments in carbon capture technology, position it as a notable contender in the oil sector. With the backing of major investors like Warren Buffett and a clear focus on sustainable technologies, OXY is shaping up to be an attractive option for those looking to diversify their portfolio with oil stocks that have a forward-looking approach.
5. Energy Select Sector SPDR Fund (XLE)
For investors seeking a diversified approach to investing in the oil and gas sector, the Energy Select Sector SPDR Fund (XLE) presents an attractive option. With a portfolio that encompasses many of the top oil and gas stocks, XLE offers exposure to a broad range of companies within the industry. Here’s a closer look at its key attributes:
- Diversification and Holdings:
- XLE holds 23 stocks, with major players like Exxon Mobil Corp and Chevron Corp being the top holdings, constituting 22.84% and 16.58% of the Index, respectively. This diversification helps mitigate individual company risks.
- The top 10 holdings account for approximately 72.39% of the total assets under management, ensuring that investors have significant exposure to the sector’s leaders.
- Performance and Yield:
- As of March 27, 2024, XLE has shown a commendable year-to-date increase of roughly 12.11% and an impressive rise of about 23.48% over the last year.
- The fund offers a 3.57% yield, with a distribution rate for 2024 at $0.73393, making it an appealing option for income-focused investors.
- Historical performance data reveals a compound annual return of 8.08% over the last 30 years, indicating steady long-term growth.
- Volatility and Costs:
- Despite its diversified nature, XLE’s beta value of 1.36 suggests it may experience higher volatility compared to individual components. Investors should consider this when assessing their risk tolerance.
- The fund has an expense ratio of 0.09%, one of the lowest in its category, which means lower costs for investors.
- The NAV as of March 26, 2024, stands at $92.50, with assets under management totaling $38,821.34 million, showcasing the fund’s substantial size and liquidity.
In summary, the Energy Select Sector SPDR Fund (XLE) offers a balanced mix of growth, income, and diversification within the oil and gas sector. Its significant holdings in industry giants, combined with a low expense ratio and a solid track record of returns, make it a compelling choice for investors looking to capitalize on the opportunities in the energy market. However, the inherent volatility indicated by its beta value warrants a cautious approach, particularly for those with a lower risk tolerance.
Conclusion
Through careful analysis of key players in the oil sector and diversified investment options such as the Energy Select Sector SPDR Fund (XLE), this comprehensive guide has underscored the vibrancy and dynamics of the oil stock market in March 2024. Highlighting the strategic moves of Chevron, Diamondback Energy, Devon Energy, Exxon Mobil, and Occidental Petroleum, we’ve delved into the aspects that make these stocks attractive to both conservative and aggressive investors. The overview of significant mergers and acquisitions, alongside an emphasis on sustainable technologies and shareholder value, reinforces the core thesis of navigating through the evolving landscape of oil stocks with informed precision.
Reflecting on the broader implications, the insights drawn from the analysis of these companies illustrate the significant potential for growth and the challenges that come with the territory. The push towards sustainable energy solutions and adaptation in response to geopolitical tensions paints a vivid picture of the sector’s future direction. Investors are encouraged to consider these facets when making portfolio decisions, keeping in mind the importance of diversification and the potential for further research in the ever-changing energy market. In essence, the journey through the best oil stocks for March 2024 serves as a foundational blueprint for navigating investment opportunities within the oil and gas sector, amidst an era of technological advancement and shifting market sentiments.
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FAQs
Q: Which oil stock should I consider purchasing currently? A: The best oil stock to buy can vary depending on current market conditions and future prospects. It’s recommended to research and consider stocks with strong fundamentals and growth potential.
Q: What are the top stock investments to make in 2024? A: The best stocks to invest in for 2024 will depend on various factors including market trends, economic forecasts, and individual financial goals. It’s advisable to consult financial experts or conduct thorough market analysis before making investment decisions.
Q: How do projections look for oil stocks in 2024? A: The forecast for oil stocks in 2024 suggests that the draw on global oil stocks will contribute to keeping Brent crude oil prices elevated, with an average price of $88 per barrel in the second quarter of 2024, which is $4 higher than previously forecasted in February of the same year.
Q: Is it still wise to invest in oil stocks? A: After experiencing negative returns in 2023, energy stocks have had a better start in 2024. Although it has modestly lagged behind the broader stock market on a year-to-date basis, the energy sector has seen gains during this period. Oil prices have increased, while U.S. natural gas prices have seen a decline.