The energy sector is broadly defined to include all companies that generate electricity. It is divided into non-renewable and renewable sources. Currently, this conversation revolves around oil and prices at the pump. It’s no secret that the price of a gallon of gas plays an important role in everyday conversations about inflation and recession-related concerns.
The good news is that prices have fallen over the past few weeks. The national average for a gallon of regular gasoline sits at $4.44 at the time of writing. That’s about 15 cents less than a week ago and more than 50 cents from a month ago.
Either way, oil and gas stocks will feature prominently in this list, but it will also include various picks across the broader renewable energy sector.
Here are seven energy stocks that are currently trading at a discount:
|LNG||Cheniere Energy, Inc.||$146.26|
|AR||Antero Resources Corporation||$39.81|
|KMI||Kinder Morgan, Inc.||$18.05|
|OXY||Western Oil Company||$62.45|
|SEDG||SolarEdge Technologies, Inc.||$323.35|
Energy stocks are trading at a discount: Cheniere Energy (LNG)
Energy Cheniere (NYSEAMERICAN:LNG) stock represents equity in the Houston-based company that focuses on liquefied natural gas (or LNG). The company has liquefaction facilities in Texas and Louisiana, as well as offices in the United States, London and Asian financial centers.
The reason to believe that Cheniere Energy is currently undervalued is that the heat wave in the United States is pushing up natural gas futures. This suggests that the LNG stock, which is currently trading around $146, could rise towards its consensus price above $168.
Cheniere Energy is expected to see increased demand for LNG used in power generation as oil companies hold production steady. The heat wave is causing an increase in the use of air conditioners, which requires more electricity to be put on the grid, and LNG futures have risen as oil supplies are not increasing.
Anterior Resources (AR)
Antero Resources (NYSE:AR) is a title to consider for several reasons. Like Cheniere Energy, it has significant natural gas production. The rise in natural gas futures bodes well for Antero Resources.
The company is both an exploration and production company with a strong upstream oil and gas presence and a midstream presence as well. The company’s Antero Midstream arm positions the company as the most integrated natural gas and liquids platform in North America.
And while that’s all well and good, investors should really pay attention to Antero Resources as earnings forecasts are improving rapidly. Analysts currently expect $1.91 in earnings per share from the company. A month ago, that figure was $1.62. Three months ago, analysts were expecting just $1.34 in earnings from the stock.
Energy stocks are trading at a discount: EQT Corporation (EQT)
As noted recently, Citigroup (NYSE:VS) reaffirmed its “buy” rating for EQT Corporation (NYSE:EQT) Inventory. The reaffirmation came on the heels of several banks and analyst firms also raising their price targets and ratings for EQT shares in recent weeks.
The Company has significant deposits of natural gas and natural gas liquids in the Marcellus formation. Like the two companies above, EQT Corporation is also benefiting from the current market dynamics that favor natural gas.
This dynamic means that demand is growing quite rapidly. And the growing demand means that revenues are growing in kind. A month ago, the company was expected to produce earnings of 56 cents per share this quarter. As demand has surged with unprecedented heat waves, so have earnings-per-share (or EPS) expectations, which have hit 80 cents in recent weeks.
Kinder Morgan (KMI)
Kinder Morgan (NYSE:KMI) is an energy infrastructure stock that works specifically in the pipeline transportation industry. And it’s working very well, as the second quarter results show.
The company released its results on July 20, which should leave investors very positive. Kinder Morgan posted a net profit of $650 million on sales of $5.151 billion in the second quarter. A year earlier, it had lost $977 million on $3.15 billion in sales as operating losses hurt its performance. The good results enabled management to issue a dividend of 27.75 cents, 3% more than a year earlier.
The company also hinted at the idea that U.S. energy infrastructure stocks will remain hot due to the political climate, saying, “The current geopolitical climate has only reinforced our view that the assets we operate and the services we provide will be needed for a long time. coming.” The company also noted that it continues to update infrastructure to accommodate renewable energy transmission as well.
Energy stocks are trading at a discount: Occidental Petroleum (OXY)
Investors worried that current energy trends may last western oil (NYSE:OXY) Inventory. The idea here is that the volatility currently favoring energy stocks, especially oil, could change quickly. This would mean that the rise in earnings could quickly dissipate if there were changes in a number of factors.
But Occidental Petroleum seems to be less sensitive to these factors based on the fact that Berkshire Hathaway (NYSE:BRK-B) recently bought another big chunk of OXY stock. After all, Warren Buffett amassed his fortune on the tried-and-tested principle of long-term investing in solid businesses that he hopes to conquer in the longer term.
Berkshire Hathaway bought an additional $250 million worth of Occidental Petroleum stock between July 11 and July 13. This brings his total ownership to 19.2% of the total market capitalization of OXY shares.
Exxon Mobil (XOM)
Exxon Mobil (NYSE:XOM) is an undervalued stock from a simple current price and target price perspective. It carries an 18% increase on this basis alone.
And everything indicates that Exxon Mobil should record massive profits this quarter, which should be multiplied by several. Equally important is that the management of the company ensures that investors continue to receive an attractive share of these profits. Last year it was the most profitable oil company. This prompted the company to set up a $10 billion share buyback program.
That’s on top of a dividend that hasn’t been cut since 2002, coupled with a healthy payout ratio of 0.58.
This means investors can ride out price declines while still relying on dividend income in the meantime. This is a smart way to play XOM stocks as it focuses on environmental changes to its business model that leave core skills intact.
Energy stocks are trading at a discount: SolarEdge Technologies (SEDG)
SolarEdge Technologies (NASDAQ:SEDG) the stock is up more than 22% built into current prices based on price targets. One of the reasons to believe that he could achieve these goals is the fact that black rock (NYSE:noir) recently bought a large block of SEDG shares.
As my colleague, Eddie Pan, pointed out, this decision was prompted by rising solar prices. In the second quarter, solar power prices rose more than 8% due to tariffs and other externalities.
The move bolsters the outlook for SEDG stocks even as Blackrock hesitates on US equities as further Federal Reserve rate hikes loom and recession fears grow. The company will report results in early August and just posted record first-quarter revenues, so its outlook is generally positive.
At the date of publication, Alex Sirois did not hold (neither directly nor indirectly) any position in the securities mentioned in this article. The opinions expressed in this article are those of the author, subject to InvestorPlace.com Publication guidelines.