Saturday 14 December, 2019

Best energy stocks to buy in 2018

2017 was another tough year for the energy sector, however, for 2018, a rebound is expected since OPEC members committed to extending their production cuts through the end of 2018 which limits a supply glut which negatively affected oil prices since they started their decline in 2014. Considering that, several stocks are expected to out-perform; these include mainstream oil giants to minor players. The following are the best energy stocks for investors to have on their radar for 2018 as the sector’s profits normalise:

 

1. Royal Dutch Shell

Royal Dutch Shell is a multinational corporation which is one of the energy sector’s major players. It is one of the world’s largest oil and natural gas companies, making it a sure pick for energy investors who is seeking a well-reputed name with low volatility. The $270 billion Netherlands-based giant is also a great dividend stock, boasting a 5.9 percent yield.

 

2. British Petroleum (BP)

This oil power player is on the rise after struggling internally to adjust to the bear market. A bear market is a condition in which securities prices fall and widespread pessimism causes the stock market's downward spiral to be self-sustaining. Investors anticipate losses as pessimism and selling increases. While it may not be an exciting pick, it is ranked as one of the best energy stocks to buy for 2018 for the same reason as Royal Dutch Shell, a 6 percent dividend. This, coupled with a lower risk involved than with smaller companies. It should be noted that BP lost more than $4.2 billion in 2015 and entered the year with five consecutive quarterly profits, while expecting to grow earnings by 35 percent in 2018.

 

3. Oasis Midstream Partners

Oasis Midstream Partners is a growth oriented, free-based master limited partnership formed to own develop, operate and acquire a diversified portfolio of midstream assets in North America in the oil and gas sector. The headquarters is based in Houston, Texas and they were founded it 2007 by parent organisation Oasis Petroleum Incorporated. Their IPO in September 2017 attracted little attention, however, OMP is a potential dividend all-star. OMP targets 20 percent distribution growth annually and in its first quarter as a public company, revenue skyrocketed 62 percent and net income spiked 71 percent higher.

 

4. Tallgrass Energy Partners

Tallgrass Energy Partners is an oil and gas pipeline company founded in 2013, with its headquarters located in Leawood, Kansas. The company operated approximately 7539 miles of pipeline in states such as Nebraska, Kansas, Wyoming, Colorado, Missouri, Illinois and Ohio. TEP has a 9 percent dividend which is quite impressive.

 

5. Valero Energy Corporation

Valero Energy Corporation is a Fortune 500 international manufacturer and marketer of transportation fuels, other petrochemical products, and power. Its headquarters is located in San Antonio, Texas and it must be noted that the company owns and operated 16 refineries throughout the U.S., Canada, U.K., and the Caribbean. Valero, a refiner, benefits from low or falling oil prices, unlike explorers, drillers and producers. VLO increased 23 percent through December 1st, with a 3.3 percent dividend, making the company a good pick if the recent increase in the oil price doesn’t last.

 

6. Haliburton

Haliburton is a giant in the oil and gas industry. They contract explorers, frackers and producers to aid them in locating, managing, drilling and extracting oil and gas more efficiently. When the oil price increases, there is also an increase in the number of drillers available, and based on supply and demand, an excess in the supply of drillers means that the cost to contract these drillers would therefore drop. If oil prices remain within the range of mid-to-upper $50s, Haliburton’s stock, which saw a revenue increase by 42 percent in the third quarter which lead to a profit in 2017, should perform well.

 

8. Exxon Mobil

Exxon is yet another oil giant, built for the long-term and designed to profit in nearly any environment. Their reputation of 34 years of dividend growth, speaks for itself. Analysts expect EPS to be 75 percent higher in 2018 than it was in 2016.

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