Top 3 Value Energy Stocks To Buy

Top 3 Value Energy Stocks To Buy

Summary

As the Russia-Ukraine war continues, fear is moving the markets, pushing inflation to continue to run hot and oil prices to near-record levels.

Fuel is at the forefront of rising prices. Year-to-date, the Energy Sector (XLE) is up +37% with no signs of abating.

Many energy stocks have quickly become overvalued. Our Quant model has identified stocks in the energy sector that still come at a reasonable valuation.

The three energy stocks featured here, VET, CPG, and BTU, come at a fair value and are considered Strong Buys based on their growth potential and profitability.

As energy stocks have surged, Investors should consider geopolitical and other risks when investing in this sector.

fatido/iStock via Getty Images Oil nears $140 barrel as Putin’s war stirs up the markets, and supply chain disruptions continue to mount as further sanctions and bans are put in play. Gas prices are hitting record highs. Energy stocks hit multi-year highs, which is why I have three value energy stocks, VET, CPG, and BTU, that stand to benefit from increasing energy prices, but also do not appear overvalued. 3 Value Energy Companies to Watch

In this geopolitical environment, energy stocks are poised to continue doing well. When you factor in the risk-off mentality and investors flocking to safe-havens like bonds that are pushing yields lower, our value energy stocks stand to benefit. If you hold energy stocks that are at all-time highs or you are contemplating purchasing energy stocks, consider rotating to some energy stocks that still come at a reasonable price and that are attractively valued.

While it’s argued that the U.S. is energy independent, in reality, the odds of this happening are slim to none as the U.S. consumes more oil than it produces. “Sometimes it’s a lot cheaper to get cargo from Rotterdam to the East Coast than to push it from Texas…It can be immensely cheaper to take oil from the Middle East than from our wells in West Texas. In the real world, energy independence doesn’t exist.” oil analyst Dan Dicker of The Energy Word .

U.S. Oil Consumption vs Production (1950-2020) U.S. Oil Consumption vs Production (1950-2020) (EIA) There are a number of uncertainties within the global energy market, stock markets, and commodity markets, in general. Two factors are helping to boost energy:

> The Global fallout and response to Russia’s invasion of Ukraine and the anything but Russia mentality.

Although bonds are slightly up for the year , the yield-sensitive nature of energy stocks tends to be inversely correlated to bonds; as yields on bonds fall, the higher yields on high dividend-paying energy stocks tend to attract investors.

Europe is deeply reliant on Russian Energy. 40% of Russia’s supply of natural gas and more than 25% of its crude oil goes directly to Europe. As consumers, businesses, and global economies are feeling the squeeze of surging fuel prices, ABC news gathered “Preliminary data from the U.S. Energy Department (that) shows imports of Russian crude dropped to zero in the last week in February.” While not all economies have adopted the bans given their stark reliance on Russian energy, nations around the world are gearing up to increase production for shipment to Europe and other nations that would need replacement energy. While the energy markets continue to be hot, let’s dive into our first value energy stock. 3 Best Value Energy Stocks

1. Vermilion Energy Inc. ( VET )

Oil exploration and its producers are taking advantage of the increase in demand. As valuations rise, a number of standout energy companies continue to trade at attractive valuations, including Vermilion Energy ( VET ). VET Valuation (Seeking Alpha Premium) Canadian-based energy company VET, along with its subsidiaries, engages in the acquisition, exploration, and production of petroleum and natural gas. At a share price under $25, Vermilion is a great pick. Its forward P/E ratio of 5.49x is trading 50% below the industry sector. It is at a significant discount to its peers.

While there are concerns about commodity volatility and VET halted its dividend in 2020 with the downturn experienced from the pandemic, a strong outlook with rising oil and gas prices are providing great tailwinds. Year-to-date, VET has seen a price increase of +75% and a one-year approaching +200%, and we believe this will continue as we see an increase in demand for oil and gas.

Vermilion 1YR Price Return vs Energy Sector ( XLE ) Vermilion 1YR Price Return vs Energy Sector ( XLE ) (Seeking Alpha Premium) […]

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