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3 Energy Stocks Poised for Double-Digit Growth Amid Crude Oil Surge

Published 18/04/2024, 10:56 pm
  • Oil prices have surged amid geopolitical tensions and increased demand.
  • Bolstering the upward trajectory were OPEC's production cuts, alongside increased bullish bets in the oil options market.
  • In this article, we will discuss 2 ways for investors to capitalize on the bullish trend.
  • If you want to invest while knowing how to avoid market risks, try InvestingPro. Sign up HERE for less than $10 per month and get an almost 40% discount for a limited time on your 1-year plan!
  • Crude oil is on the rise amid a confluence of factors that are driving up prices. Geopolitical tensions have flared up, with Russia's attacks on Ukrainian energy infrastructure injecting nervousness into the market.

    Further fueling the uptrend is a significant increase in demand for physical oil alongside a surge in bullish bets on the oil options market. In recent days, there's been a strong demand for futures and options as volatility ramps up.

    Adding to the bullish flames, OPEC's production cuts are acting as another tailwind for prices. Despite these reductions, OPEC remains optimistic, projecting continued global oil demand growth throughout 2024.

    Brent crude oil futures rose as high as $92.18 last week and forecasts point to $94-95 as a first upside target. To see $100, geopolitical risks would have to intensify, which cannot be ruled out at this point.

    Oil Price Chart

    As a result of these tailwinds, oil companies are firmly back in the spotlight, intriguing investors who were already closely monitoring the sector.

    So, in this piece, we will take a look at a few ways to benefit if the uptrend continues. We will analyze ETFs alongside individual stocks.

    What's Behind Oil's Muted Response to Iran Attack?

    The reason for the modest rise in oil prices following Iran's attack on Israel is twofold. Firstly, Iran's attack was not as severe as initially anticipated and easily dealt with by Israel.

    Secondly, the US aims to prevent a broader conflict in the region. Therefore, it communicated to Israel that it would not join in if Israel retaliated against Iran.

    Iran doesn't want US intervention so it acted in a controlled manner to avoid excessive damage and casualties.

    Consequently, oil prices did not surge dramatically on Monday following the weekend's events. However, the future remains uncertain, and we can make four assumptions about potential outcomes and their impact on oil prices:

    • If there's an attack on Iran's energy infrastructure, oil prices could soar, possibly reaching $100 per barrel for Brent crude.
    • If Iran closes the Strait of Hormuz, a vital route for about 20 million barrels of oil daily, prices could climb even higher, potentially ranging between $105 and $110.
    • The imposition of sanctions on Iran could push crude oil prices to fluctuate between $90 and $95.
    • If tensions between Israel and Iran remain contained, oil prices might hover between $87 and $90 per barrel.

    Additionally, the US could intervene by releasing more crude oil from its strategic reserves if necessary, further influencing market dynamics.

    So, let's take a look at the two ways to play this situation:

    • 2 ETFs to invest in oil, one in Brent and one in WTI.
    • 3 interesting stocks that have in common are that they do not present any sell rating and also InvestingPro models give it a double-digit potential.

    Let's kick off with the 3 stocks.

    1. Chevron

    Chevron Corp (NYSE:CVX) was formerly known as ChevronTexaco Corporation and changed its name to Chevron Corporation in 2005. It was founded in 1879 and is headquartered in San Ramon, California.

    Chevron Price Chart

    Its dividend yields are at 4.04% and it will release its quarterly numbers on April 26. Its shares are down -3.98% in the last 12 months but up 10.87% in the last 3 months.

    It has 27 ratings, of which 18 are buy, 6 are hold and none are sell. The market consensus sees it at $177.86, although according to InvestingPro's models, its reasonable price would be $203.

    2. TotalEnergies)

    TotalEnergies (NYSE:TTE) was formerly known as TOTAL and changed its name to TotalEnergies in June 2021. It was founded in 1924 and is headquartered in Courbevoie, France.

    TotalEnergies Price Chart

    Its dividend yield is 3.19% and it will present its quarterly accounts on April 26. Its shares are up 16.31% over the past 12 months.

    It has 24 ratings, of which 18 are buy, six are hold and none are sell. InvestingPro models estimate a reasonable price of $93.28.

    3. Shell)

    Shell (NYSE:SHEL) is a British hydrocarbon company, originally from the Netherlands, which is involved in the oil and natural gas sectors.

    Shell Price Chart

    It was established in 1907 and is headquartered in London. Its dividend yield is 3.83% and it reports its quarterly results on May 2.

    Its shares are up 21.91% in the last 12 months. It has 23 ratings, of which 16 are buy, seven are hold and none are sell. InvestingPro models give it a fair value of around $81.90.

    Bonus: Here Are the 2 ETFs to Consider

    • 1. WisdomTree WTI Crude Oil (LON:CRUD)

    Replicates the Bloomberg WTI Crude Oil MultiTenor index, which tracks the price of WTI oil futures contracts.

    Total expenses are 0.49%. It manages 758 million, is domiciled in Jersey and was created on September 27, 2006.

    It has a 5-year yield of 22.11%, a 3-year yield of 110.25% and a 1-year yield of 16.05%.

    • 2. WisdomTree Brent Crude Oil (LON:BRNT)

    Replicates the Bloomberg Brent Crude index, which tracks the price of Brent oil futures contracts.

    Total expenses are 0.49%. It manages 1557 million, is domiciled in Jersey and was created on January 9, 2012.

    Its 5-year return is 94.53%, 3-year return is 127.28% and 1-year return is 17.56%.


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    Disclaimer: The author does not own any of these shares. This content, which is prepared for purely educational purposes, cannot be considered as investment advice.

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