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7 hot energy stocks to buy on the dips

  • These are some of the best energy stocks to buy that offer strong upside potential.
  • Devon Energy (NDV): Efficient capital management and a dazzling dividend yield of over 7.39%.
  • NextEra Energy (BORN): Clean energy giant with an incredible growth streak ahead.
  • Antero Resources (AR): The upstream natural gas sector stands to benefit enormously from Europe’s move away from natural gas supplied by Russia.
  • Enbridge (IN B): Unique portfolio of renewable and non-renewable energy midstream assets.
  • Kinder Morgan (KMI): Growing cash flow base with a remarkable dividend yield of 5.72%.
  • western oil (OXY): Solid liquidity with a 750% increase in free cash flow.
  • VAALCO Energy (EGY): Major oil and gas stocks are rising at above-average rates.

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Energy stocks have crashed over the past two years due to the historic drop in demand at the start of the pandemic. However, demand has increased significantly over the past year as businesses have started to reopen. Additionally, oil prices have been skyrocketing since Russia invaded Ukraine, which bodes incredibly well for energy stocks to buy.

Parts of China are still under Covid-19 restrictions, but the strength of crude oil continues to impress. Additionally, the economic rebound could be the next potential catalyst for the industry. Additionally, with supply tightening, we could see high oil prices throughout 2022.

Traditional and renewable energy stocks can be remarkably lucrative investments in terms of capital appreciation and dividend growth. However, it would be prudent to wait for pullbacks and dips before investing in this hot sector. Let’s dive into seven of the top energy stocks to buy during downturns.

NDV Devon Energy $69.98
BORN NextEra Energy $72.28
AR Antero Resources $38.68
IN B Enbridge $44.47
KMI Kinder Morgan $18.80
OXY western oil $64.16
EGY VAALCO Energy $6.38

Devon Energy (NDV)

7 hot energy stocks to buy on the dips

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Devon Energy (NYSE:NDV) is one of the most attractive oil and gas areas in the market, with some of the best margins in the industry. Additionally, with an astonishing portfolio of assets, the company will continue to generate strong returns for its shareholders.

It also offers an eye-catching dividend yield of 7.3% and a payout ratio of 50%. This makes it one of the best choices in the industry for income-oriented investors.

DVN stock has been an efficient allocator of capital, significantly outperforming its peers on several metrics. For example, its gross margins and EBITDA trailing 12 months (TTM) are 58.2% and 44.5%, respectively, which exceed the industry average.

This is largely due to its outstanding operational performance last year, when its sales soared over 190%. With the current favorable environment for the oil and gas sector, expect DVN stock to post another rock-solid performance this year.

NextEra Energy (BORN)

7 hot energy stocks to buy on the dips

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NextEra Energy (NYSE:BORN) has benefited enormously from the clean energy transition, with NEE stocks generating more than 400% in total returns over the past decade. Its solar and wind energy business has propelled it to become the largest utility company in the United States.

The word going around these days is that maybe the fossil fuel industry will take center stage again in the energy sector, which seems like a far-fetched idea. In fact, in recent years, wind and solar energy have contributed the most to electricity generation additions in the United States.

Earnings growth has lagged lately mainly due to hedging, which is significant and does not constitute an actual loss. Nevertheless, TTM’s gross margins and EBITDA increased by double-digit percentages.

This year, the company expects its adjusted earnings per share (EPS) to be in the range of $2.75 to $2.85 compared to the consensus of $2.81. Moreover, from 2023 to 2025, it expects a healthy growth of 6% to 8% per year compared to its forecast EPS for 2022. Therefore, it has good prospects for the future and should offer a healthy upside in the future.

Antero Resources (AR)

7 hot energy stocks to buy on the dips

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Antero Resources (NYSE:AR) is a leading upstream natural gas exploration and production company. It is emerging from a superb year in which its free cash flow (FCF) increased by more than 120%. Going forward, he expects to generate FCF growth of around 50%. Plus, it’s paid off a truckload of debt in recent months and is expected to boost shareholder returns.

The company has a 29% stake in Antero Midstream, which gives it the transmission pipelines needed to deliver liquefied natural gas (LNG) in the United States. LNG exports are expected to increase significantly as European countries reduce their dependence on natural gas supplied by Russia. Therefore, we could be looking at a massive revenue expansion.

Additionally, Antero repurchased $100 million of shares during the first quarter at an average price of $27.11 each. This practice is expected to continue for the foreseeable future.

Enbridge (IN B)

7 hot energy stocks to buy on the dips

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Enbridge (NYSE:IN B) has one of the most unique midstream asset portfolios that includes both renewable and non-renewable energy. He builds a gigantic utility company supported by the growing population of the Toronto, Ontario area.

Over the years, it has been a stable player, steadily increasing its revenue and margins. Last year, it recorded above-average growth due to favorable sector winds, which should continue to play a role this year. Plus, it offers an incredible dividend yield of around 6% and a payout ratio of over 100%.

The company’s financials have been remarkable, with its adjusted EBITDA rising to C$4.1 billion from C$3.7 billion in the first quarter. Additionally, it reiterated its adjusted EBITDA of CAD 15 billion to CAD 15.6 billion this year, a substantial increase from the CAD 14 billion it saw last year. It also plans to sanction nearly $1 billion in development projects to expand its asset base.

Kinder Morgan (KMI)

7 hot energy stocks to buy on the dips

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Kinder Morgan (NYSE:KMI) is the crème de la crème of the energy infrastructure sector, which includes multiple assets, pipelines and terminals. The company has done well in generating healthy cash flow for its investors, but lackluster performance over the past year has turned investors away.

However, its management expects a strong performance this year, with more than $5.1 billion in distributable cash flow. Although it was significantly lower than the $5.7 billion, if adjusted for the one-time perk he received due to Winter Storm Uri, he would have ended up with $4.6 billion. Perhaps the best thing about the stock is its commitment to rewarding its shareholders. The dividend yield is a spectacular 5.72% as the stock trades at less than three times forward sales.

western oil (OXY)

7 hot energy stocks to buy on the dips

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western oil (NYSE:OXY) is a United States-based oil and gas property developer. It operates a geographically diverse operation, spanning the United States, the Middle East, Latin America and Africa with its properties. Over the past few years, it has performed consistently, returning a good amount of cash to shareholders.

Over the past year, his FCF balance has jumped over 750%, which has helped reduce his debt load. It plans to reduce its debt balance by a whopping $20 billion.

Conservative estimates suggest that the company could generate more than $12 billion in FCF, an impeccable figure compared to previous years. No wonder the Oracle of Omaha, Warren Buffet, has been stocking up on action at a blistering pace.


7 hot energy stocks to buy on the dips

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VAALCO Energy (NYSE:EGY) is one of the most attractive low-cost oil and gas stocks. Last year, the company grew at an enviable pace, with EGY shares rising more than 145% in value. In its first quarter this year, oil production was 8,051 barrels per day, up significantly from last year.

In addition, sales reached $68.7 million for the first quarter compared to $39.8 million for the same period last year. Oil prices averaged terrific above $100 a barrel in the first quarter.

Additionally, it ended the quarter with a fabulous cash equivalent of $18.9 billion without any debt, making it a very flexible business. Additionally, EGY stock is trading at just 1.7 times forward sales, a one-time valuation.

As of the date of publication, Muslim Farooque had (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 publishing guidelines.

Muslim Farooque is a passionate investor and an optimist at heart. A long-time gamer and tech enthusiast, he has a particular affinity for analyzing tech stocks. Muslim holds a Bachelor of Science in Applied Accounting from Oxford Brookes University.


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