- Oil stocks and gas stocks are both expected to show strong returns this summer. But which oil and gas stocks are the best to buy?
- KLX Energy Services (KLXE): Analysts at American Energy Services say they’re expecting the company to reach breakeven by the end of the year.
- Mesa Royalty Trust (MTR): Mesa Royalty works on oil and gas properties in Kansas, New Mexico and Colorado.
- Nine Energy Service (NINE): Even though it’s not an oil producer, Nine Energy is one of the best oil stocks you can buy right now.
- Overseas Shipholding Group (OSG): OSG looks to be a solid bet as a top oil stock as global oil demand is expected to rise throughout 2023.
- Riley Exploration Permian (REPX): The stock is up 40% so far this year, but the move higher may just be getting started.
- San Juan Basin Royalty Trust (SJT): San Juan Basin Royalty is currently offering a ridiculous dividend yield of 24.7%.
- Vista Energy (VIST): Morgan Stanley analyst Bruno Montanari calls Vista the “preferred way to play Argentina energy.”
Oil and gas stocks have been lucrative for many investors for the last couple of years. Oil prices remain elevated even though they’re not at their peak. Natural gas remains in demand, and geopolitical instability will probably inflate prices.
Now we’re headed into the summer vacation season. Yes, inflation remains a problem, but the unemployment rate means that people are working, and the vacation season looks to be a solid one. That’s another reason to like oil and gas stocks for now.
This is an excellent time to consider the best oil and gas stocks to buy. But how do you choose the best?
The Portfolio Grader is one handy tool that rates all stocks on an “A” through “F” scale based on telling metrics, including earnings performance, momentum, dividends and analyst sentiment.
Read on to see why the summer of 2023 should be rosy for these oil and gas stocks.
|KLXE||KLX Energy Services||$9.97|
|MTR||Mesa Royalty Trust||$18.22|
|NINE||Nine Energy Service||$3.86|
|REPX||Riley Exploration Permian||$42.01|
|SJT||San Juan Basin Royalty Trust||$7.62|
KLX Energy Services (KLXE)
Houston-based KLX Energy Services (NASDAQ:KLXE) provides oilfield services, tools, technology and equipment to oil companies, focusing on completion and production services. It works in many active shale basins, including the Permian, Bakken and Marcellus basins.
KLX Energy recorded a loss of $3.1 million in 2022, but I wouldn’t be surprised to see it turn a profit in 2023. Analysts at American Energy Services say they expect the company to reach breakeven by the year’s end, with a growth of 83% on a year-over-year basis.
Keeping that in mind, this may be an ideal time to get KLXE stock at a discounted price. KLX stock is down by 45% so far this year. But analysts have a consensus price target of $26 on the stock, forecasting a 176% upside.
KLXE stock has an “A” rating in the Portfolio Grader.
Mesa Royalty Trust (MTR)
Mesa Royalty Trust (NYSE:MTR) is a different kind of investment vehicle. Royalty trusts allow investors to buy into a company to profit from the income produced by the asset, usually a coal mine, oil well or gas deposit.
Investors get cash distributions based on royalties if the company produces revenue from the natural resource, but when the resource is exhausted, the trust is dissolved.
Mesa Royalty works on oil and gas properties in Kansas, New Mexico and Colorado, with the vast majority of its profits coming from holdings in New Mexico. Because of the royalty trust’s tax structure, the trust offers a dividend much higher than you would expect from a traditional stock, currently with a yield of more than 10.6%.
You can’t ask for much more from the best oil stocks. MTR stock has an “A” rating in the Portfolio Grader.
Nine Energy Service (NINE)
We’re staying in Houston with a look at Nine Energy Service (NYSE:NINE). Nine Energy comes in after a well is drilled and prepares it for production. It runs tubes and cements that casing when needed so oil companies can get the oil out of the ground.
It has operations everywhere, including in the Permian, Eagle Force, Marcellus and Utica basins.
Even though it’s not an oil producer, Nine Energy is one of the best oil stocks you can buy now. Fourth-quarter earnings of $166.67 million just topped analysts’ estimates and were more than 58% better than a year ago.
Nine Energy stock is a bargain right now – the stock is down more than 70% so far this year but has a consensus price target of $13.75. That gives it a projected runway of more than 250%.
NINE stock has an “A” rating in the Portfolio Grader.
Overseas Shipholding Group (OSG)
Overseas Shipholding Group (NYSE:OSG) operates two dozen oil tankers and tug barges from its Tampa, Florida headquarters.
The stock is up 28% this year, and investors appreciate the company’s aggressive share buyback plan. Its announced plan in March to repurchase 10 million shares was the third effort in less than a year.
It also bought 5 million shares from Cyrus Capital in November and announced a 5 million share buyback in June 2022.
Earnings in the fourth quarter were $121.7 million, an increase of 27.5% from a year ago.
OSG looks to be a solid bet as a top oil stock, as global oil demand is expected to rise throughout 2023. Overseas Shipholding has an “A” rating in the Portfolio Grader.
Riley Exploration Permian (REPX)
With some companies, you know exactly what they’re all about just by their name. Take, for example, Riley Exploration Permian (NYSEAMERICAN:REPX). The company focused in the Permian Basin, with operations in Texas and New Mexico.
The company is on the move, having increased production by 31% from 2021 to 2022. It posted net income of $118 million for the year, or $6.04 per share.
And it’s expanding. In February, it announced plans to buy oil and natural gas assets from Cibolo Energy Partners for $330 million. The company’s growing portfolio is expected to help it increase production from 8.8 MBbls/d (thousand barrels per day) in 2022 to 12.8 to 13.4 MBbls/d.
Riley Exploration stock is already increasing – up 40% this year. But analysts think that it has another 39% to go, so you still have time to get in on this one.
REPX stock has an “A” rating in the Portfolio Grader.
San Juan Basin Royalty Trust (SJT)
Another royalty trust is San Juan Basin Royalty Trust (NYSE:SJT), which has assets in the San Juan Basin in northwestern New Mexico. At the end of 2022, the property included 4,400 wells and had reserves estimated to be 146,651 million cubic feet (MMcf) of natural gas and 353 MbBls of crude oil.
That bodes well for shareholders (known by royalty trusts as unit holders), as oil and gas prices are expected to stay strong throughout the year.
Earnings for the fourth quarter were $12.03 million, up a whopping 82% from the previous year. Net income of $28.78 million and earnings per share of 62 cents were up by similar percentages.
And remember how royalty trusts’ unique tax structure means a higher payout than a regular stock? San Juan Basin Royalty is currently offering a dividend yield of 24.7%.
SJT stock has an “A” rating in the Portfolio Grader.
Vista Energy (VIST)
Vista Energy (NYSE:VIST) is the one stock on this list that’s based outside the U.S. Headquartered in Mexico City, Vista is the third-largest oil producer in Argentina and the second-largest share producer in that country.
Morgan Stanley analyst Bruno Montanari calls Vista the “preferred way to play Argentina energy” based on its ability to over-deliver on cash generation and execution.
The company issued first-quarter results on April 25. Revenue of $303 million was up 46% from a year ago. Adjusted net income of $72 million, which was an increase of 84% from the same quarter a year ago.
Those types of numbers should help Vista remain one of the best oil stocks to buy. VIST stock is up 29% this year and has an “A” rating in the Portfolio Grader.
This post originally appeared at InvestorPlace.
On the date of publication, Louis Navellier held REPX and VIST. He did not hold (either directly or indirectly) any other positions in the securities mentioned in this article.
On the date of publication, the InvestorPlace Research Staff member primarily responsible for this article did not hold (either directly or indirectly) any positions in the securities mentioned in this article.