The oil and gas industry has long been a staple in the world of investing. For decades, it's been the backbone of the global economy, driving everything from transportation to manufacturing. But today, with increasing talk of green energy and sustainability, you might be wondering, “Is investing in oil and gas still worth it?” The answer is yes - if you know where to look.
Even with the shift toward renewable energy, oil and gas are still essential to our daily lives, and companies in this sector remain some of the largest and most profitable in the world. In this article, we’ll explore some of the top oil and gas stocks you should keep an eye on, along with how to navigate the industry in an evolving energy landscape.
Why Oil and Gas Still Matter ⛽
While the world is gradually transitioning to greener energy sources, the reality is that oil and gas will remain crucial for many years to come. Planes, ships, and many industrial processes still heavily rely on fossil fuels. Not to mention that oil is a key ingredient in countless products, from plastics to chemicals.
Also, many oil companies are actively investing in renewable energy projects right now, positioning themselves for a future where they’ll likely be leaders in both fossil fuels and alternative energy.
Top Oil and Gas Stocks to Watch 👀
Here’s a rundown of some of the top players in the oil and gas industry. These companies are at the forefront of exploration, production, and refining, while some are also taking steps toward greener energy initiatives.
1. Diamondback Energy, Inc. (FANG)
Diamondback is an independent oil and gas company that focuses on exploration and production. Based in Texas, it’s a big player in the Permian Basin, one of the most productive oil fields in the U.S.
Diamondback has been steadily increasing its dividend payouts, making it potentially an attractive option for income-focused investors.
At the time of writing in October 2024, Diamondback is currently a ‘Buy’ and may increase in value by 22.28% over the next year.
2. Marathon Petroleum Corporation (MPC)
Marathon is one of the largest refiners in the U.S., converting crude oil into usable products like gasoline and diesel.
Marathon has a vast network of refineries and pipelines, which gives it an advantage in terms of operational efficiency. In addition to its refining prowess, Marathon is also pushing into the renewable fuels space, making sustainable fuels like biodiesel.
Marathon is also currently considered to be a ‘Buy’, which might increase in value by 33.93% over the next 12 months.
3. Chevron Corporation (CVX)
Chevron is one of the biggest integrated oil companies in the world, with operations spanning from exploration and production to refining and chemicals.
Chevron is a blue-chip stock, meaning it's a large, established company with a long track record of stable earnings and dividends. It has also made substantial investments in green energy, including hydrogen and carbon capture technologies.
According to analysts, Chevron is a ‘Buy’ and might increase in value over the next year by 21.60%.
4. Valero Energy Corp (VLO)
Valero is primarily a refining company, transforming crude oil into fuel and other products.
Valero is the largest independent refiner in the U.S., and its focus on efficiency and cost management has made it highly profitable. It also benefits from a strong demand for gasoline and diesel.
Valero is also a key player in renewable fuels, particularly in producing ethanol and other biofuels.
A ‘Buy’ as of October 2024, Valero is predicted to grow in value by 33.66% over the next year.
5. EOG Resources, Inc. (EOG)
EOG is one of the largest independent oil producers in the U.S., with operations primarily in shale oil.
EOG is known for its operational efficiency and high-quality assets, which allow it to produce oil at lower costs than many competitors. It also has a strong history of dividend growth, making it a favourite among income investors.
Right now, this stock is a ‘Buy’ and analysts think it might grow in value over the next year by 17.27%.
6. Exxon Mobil Corp (XOM)
Exxon is a global energy powerhouse, involved in everything from oil extraction to refining, chemicals, and now, renewable energy projects.
Exxon’s scale is hard to beat - it has a massive global presence and significant cash flow, which supports its high dividend payments. It’s also positioning itself as a future leader in carbon capture technology, aligning itself with the global push for sustainability.
Exxon is one of the few companies that has consistently paid out dividends for more than 100 years - as well as raising dividends every year for 41 years!
According to analysts, Exxon might increase in value by 9.48% over the next 12 months, and it’s considered to be a ‘Buy’.
7. Coterra Energy Inc (CTRA)
Coterra is another independent oil and gas producer, with operations in both oil and natural gas.
Coterra is known for its strong cash flow and efficient operations, particularly in the Permian Basin and Marcellus Shale. It’s a good option for investors who want exposure to both oil and natural gas markets.
Coterra was formed from the merger of Cabot Oil & Gas and Cimarex Energy, creating a more diversified energy producer.
This stock is considered to be a ‘Buy’, and analysts think the price might increase by a whopping 43.85% over the next 12 months.
8. BP p.l.c (BP)
BP is a British multinational oil and gas company with global operations.
BP has invested billions into wind, solar, and other renewable energy sources, aiming to transition from being an oil supermajor to a leader in green energy too.
Analysts call BP a ‘Buy’ and they think it might increase in value by 37.31% over the next year.
9. Schlumberger Limited (SLB)
Schlumberger is a leading provider of technology and services to the oil and gas industry, including drilling, production, and reservoir management.
Schlumberger isn’t an oil producer but a service provider. This means it makes money whether oil prices are high or low, as producers always need their services.
Schlumberger is also investing in renewable energy technologies like geothermal energy, diversifying its business as the energy landscape changes.
This stock has the highest potential increase in value on our list, as analysts say it might go up by 58.51% in the next year. That’s one reason why they call it a ‘Buy’ right now.
Tips for Investing in Oil and Gas 📝
- Look for Diversification: Companies that operate across the oil supply chain (from production to refining to services) offer a diversified revenue stream, which might help balance out risks.
- Dividends Matter: Many oil companies offer consistent dividends, which can provide a stable return even when stock prices fluctuate. Be sure to consider the dividend history when choosing stocks.
- Be Mindful of Green Energy: While oil and gas will likely remain critical for decades, the industry is changing. Oil and gas companies that are actively investing in renewable energy might have a potential advantage as the world shifts towards greener alternatives.
- Watch Oil Prices: Oil stocks are closely tied to the price of crude oil. When oil prices rise, so do the profits of these companies - but the opposite is also true. Keeping an eye on global oil trends might help you time your investments better.
Wrapping It Up
Investing in oil and gas isn’t just about fossil fuels anymore. Today’s top players are evolving, positioning themselves to profit from both traditional energy and the green revolution. With strong dividends, global operations, and a clear path toward sustainability, these companies might offer a unique opportunity for investors to grow.
If you’re interested in investing in oil and natural gas, take a look at our Oil and & Gas neme, where we have collected a selection of handpicked stocks for investors to choose from. You can find up to date info on all these stocks and more.
Start your investment journey today with Nemo Money. New users who register will recieve a 50% registration bonus - we’ll give you 50% of whatever you top up your account with, up to a maximum bonus of $50. Start your journey now!
All stock information was correct at the time of writing in October 2024.
