If you love oil and gas stocks, then this may be the time for you.
Oil prices are back on the rise, which is great news for investors who are looking for the best oil stocks to buy and bad news for people looking to drive to the beach for Labor Day weekend.
Yes, prices are up only 5% in 2023, but the price of crude is up 20% since June 27. The last two months have been very good for investors in oil stocks.
While prices aren’t as high as they were in 2022, this is still a good time to be investing. Oil and gas companies generally can count on higher profits and better margins when the price of oil is up.
And when oil and gas companies are raking it in, they’re much more willing to give back to investors in the form of stock buybacks and dividends. Energy stocks can be some of the best stocks that income investors can own.
I’ve used the Portfolio Grader to pick some of the best-rated oil and gas stocks to buy now.
Halliburton (HAL)
Oilfield services company Halliburton (NYSE:HAL) is one of my favorite energy stocks.
The company works all over the world, providing cementing, well construction and completion services for the upstream oil and gas industry.
Even before Hurricane Idalia’s swept through the Gulf of Mexico, oil prices were on the way up. It’s too early to say if the hurricane and subsequent cleanup will affect oil prices; the Gulf region is responsible for 15% of U.S. oil production.
Either way, I like how Halliburton stock is positioned now. Revenue in the second quarter was up 14.2% to $5.8 billion. Earnings per share of 77 cents was up more than 50% from a year ago.
HAL stock is up 30% since May and also offers a dividend yield of 1.6%. It gets an “A” rating in the Portfolio Grader for oil and gas stocks.
Vista Energy (VIST)
Vista Energy (NYSE:VIST) is the third-largest oil producer in Argentina with its primary assets being in Vaca Muerta, which is the largest shale oil and shale gas play under development outside North America. It’s also one of the best oil and gas stocks to buy right now.
The company currently has 76 tied-in wells in Vaca Muerta, with ambitions to eventually have up to 1,150 wells across 205,600 acres.
The company produced 46,557 barrels of oil equivalent per day in the second quarter, up 4% from a year ago. Revenues were $231 million down 22% from a year ago largely because of the drop in oil prices. But as energy prices increase, so will Vista’s profits.
The stock is having a strong 2023, jumping by 71% so far this year to an all-time high. Analysts have a consensus price target of $31.45, which indicates another 17% of gains are possible.
VIST stock has an “A” rating in the Portfolio Grader.
Profire Energy (PFIE)
Profire Energy (NASDAQ:PFIE) is an oilfield technology company. It specializes in designing burner-management systems and combustion-management technologies.
The systems are used by oilfield companies to control the performance and efficiency of their heating processes. It includes controlling startups and shutdowns, temperature monitoring and controlling the flame.
Profire is a relatively small company with a market capitalization of only $133 million. But its revenue growth is anything but small. Q2 revenue of $14.4 million was up nearly 50% from a year ago.
Net income of $2.9 million was much better than the $284,000 the company posted a year ago. In fact, it was the highest net income in Profire Energy’s history.
Profire doesn’t offer a dividend yet, but the stock price is on fire. It’s up 165% this year. PFIE stock has an “A” rating in the Portfolio Grader.
Plains All American Pipeline (PAA)
Plains All American Pipeline (NASDAQ:PAA) operates a network of more than 18,300 miles of crude oil and natural gas pipelines and gathering systems.
The company maintains more than 140 million barrels of storage capacity.
It’s notably also structured as a master limited partnership. As an MLP, PAA ownership shares trade publicly like a stock. Investors get increased dividend payouts and reduced taxes because of the unique tax structure of MLPs.
The structure gives Plains shareholders an opportunity to invest in the energy space while getting the tax benefits and payouts of an MLP.
The stock is up nearly 30% so far this year, and PAA also has a generous dividend yield of 7%. It gets an “A” rating in the Portfolio Grader.
Plains GP Holdings (PAGP)
It’s no coincidence that Plains GP Holdings (NASDAQ:PAGP) has a common name with Plains All American Pipeline. Because it’s essentially the same company.
Plains GP Holdings is a midstream energy infrastructure company that operates two subsidiaries—Plains Gas Solutions, which designs and operates gas procession plants, and Plains Oryx Permian Basin, which is a crude oil midstream service provider in the Permian Basin.
But it also holds a controlling interest in Plains All American Pipeline, the MLP we already discussed.
That means these companies are going to be joined at the hip as far as performance, and they even issue quarterly statements and earnings reports that freely discuss both companies.
Like PAA, PAGP stock is up nearly 30% this year, although the dividend yield is slightly less at 6.6%. But it still gets an “A” rating in the Portfolio Grader.
Borr Drilling (BORR)
Borr Drilling (NYSE:BORR) is a Bermuda-based international drilling contractor. The company operates jack-up rigs that provide drilling services to oil and gas exploration and production companies.
The company’s rigs can drill as deep as 35,000 feet while operating in water depths of up to 400 feet. It currently has 22 rigs, with two more under construction.
Earnings for the second quarter included revenue of $187.5 million, up 78% from a year ago.
Unfortunately for investors, Borr diluted shareholder value somewhat in August by issuing 1 million new common shares. That move pushed Borr stock down 16% in August, but it’s still showing a gain of 41% for the year.
The demand for oil and gas will remain consistent, despite efforts from environmentalists to find clean energy solutions. This may be an opportunity to buy BORR stock at a discount.
BORR has an “A” rating in the Portfolio Grader.
Archrock (AROC)
Archrock (NYSE:AROC) provides natural gas compression services to the oil and natural gas industry. It also supplies aftermarket services to customers who own their own natural gas compression equipment.
Compression is important because gas that is under higher pressure can be transported over long distances via pipelines. It’s also important for both industrial and commercial use because people using natural gas need to be under specific pressure to be released and used.
With shale plays from California to the Mid-Atlantic, Archrock is one of the leading companies in the U.S. for natural gas compression services.
Q2 revenue was $247.5 million, up from $215.8 million a year ago. Income was $24.7 million, up from $16.7 million a year ago.
AROC stock is up 42% this year and provides a dividend yield of 4.9%. It gets an “A” rating in the Portfolio Grader.
— Louis Navellier and the Investor Place Research Staff
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Source: Investor Place