Breaking News
Get 40% Off 0
👀 Reveal Warren Buffett's stock picks that are beating the S&P 500 by +174.3% Get 40% Off

3 Energy Giants With Over 40% Growth Potential According to InvestingPro

By Investing.com (Damian Nowiszewski)Stock MarketsOct 03, 2023 18:11
ph.investing.com/analysis/3-energy-giants-with-over-40-growth-potential-according-to-investingpro-183196
3 Energy Giants With Over 40% Growth Potential According to InvestingPro
By Investing.com (Damian Nowiszewski)   |  Oct 03, 2023 18:11
Saved. See Saved Items.
This article has already been saved in your Saved Items
 
 
SWN
+0.14%
Add to/Remove from a Portfolio
Add to Watchlist
Add Position

Position added successfully to:

Please name your holdings portfolio
 
SHEL
+1.16%
Add to/Remove from a Portfolio
Add to Watchlist
Add Position

Position added successfully to:

Please name your holdings portfolio
 
EQNR
+1.87%
Add to/Remove from a Portfolio
Add to Watchlist
Add Position

Position added successfully to:

Please name your holdings portfolio
 
SHEL
+1.53%
Add to/Remove from a Portfolio
Add to Watchlist
Add Position

Position added successfully to:

Please name your holdings portfolio
 
CL
+1.98%
Add to/Remove from a Portfolio
Add to Watchlist
Add Position

Position added successfully to:

Please name your holdings portfolio
 
NG
-1.29%
Add to/Remove from a Portfolio
Add to Watchlist
Add Position

Position added successfully to:

Please name your holdings portfolio
 
  • Shell's stocks show a persistent upward trend.
  • Equinor demonstrates stable growth prospects, although overcoming key resistance poses a challenge for potential buyers.
  • Meanwhile, Southwestern Energy tries to benefit from increasing US LNG exports

Energy companies have seized the attention of investors over the last few months, as the prices of crude oil and, to a lesser extent, natural gas have jumped higher once again.

While this uptrend hasn't fully transmitted to energy stocks, savvy investors have begun to expect very positive earnings for the sector in the quarters ahead, likely pushing stocks upward.

This outlook is further supported by our InvestingPro fair value indicator, which now anticipates a roughly 40% upside for three of the industry's players, namely: Southwestern Energy (NYSE:SWN), Shell (NYSE:SHEL), and Equinor (NYSE:EQNR).

Southwest Energy InvestingPro Fair Value
Southwest Energy InvestingPro Fair Value

Shell InvestingPro Fair Value
Shell InvestingPro Fair Value

Equinor InvestingPro Fair Value
Equinor InvestingPro Fair Value

Source: InvestingPro

In the context of our current analysis, it's crucial to consider the upcoming OPEC+ cartel meeting scheduled for October 4. However, while it's improbable that this meeting will bring about a significant breakthrough, it's also worth noting that the group's present strategy revolves around production reduction, with Saudi Arabia and Russia spearheading this effort by jointly committing to cut production by 1.3 million barrels per day by year-end. This concerted effort is contributing to the increase in oil prices.

1. Southwestern Energy: Attractive Valuation

Southwestern Energy is a U.S.-based upstream company that primarily focuses on natural gas production within the Appalachian Basin in Pennsylvania and West Virginia, accounting for 73% of its reserves. Additionally, it operates in the Haynesville Shale field, contributing to 27% of its reserves.

When considering a long-term perspective, the company is poised to benefit from the projected increase in demand for natural gas, making it an excellent energy source to complement renewable energy sources (RES). Furthermore, the company's exports are expected to play a pivotal role, with projections indicating a doubling of export volumes over the next two years from the current level of 12 BCF/d.

From a strictly fundamental standpoint, Southwestern Energy not only boasts a high fair value ratio but also ranks among the companies with the strongest financial health. Moreover, it offers an attractive price/earnings and price/book value valuation when compared to its competitors.

Southwestern Energy Valuation Vs. Competition
Southwestern Energy Valuation Vs. Competition

Source: InvestingPro

A positive technical development would be a dynamic breakout above $7 per share.

2. Shell: Bulls Keep Pushing Stock Upward

In an upward trajectory since October 2020, Shell has been garnering significant attention in recent weeks. This sustained growth is primarily attributed to the continual upward pressure on oil prices and the news regarding a substantial reduction in inventories at the storage center in Cushing, Oklahoma, which now stands at 22 million barrels, marking the lowest levels since last July.

Currently, buyers are testing the resistance of $65 per share. Breaking through this zone would pave the way for significantly higher price levels.

Shell Weekly Chart
Shell Weekly Chart

The key target for buyers is the all-time high located in the price region of $82 per share.

3. Equinor Continues to Expand Into Europe

Following the outbreak of the conflict in Ukraine, Norway, in collaboration with the United States, has emerged as a primary partner for European nations in the supply of natural gas. That trend has boosted Norway-based Equinor's participation and profits.

The company also took the opportunity to increase its influence in the old continent by signing a long-term raw material supply agreement with Austrian giant OMV (VIE:OMVV). The agreement will run for five years and calls for the supply of 12 terawatt-hours (TWh) per year.

Moreover, Equinor is also developing its oil production sector. The Breidablikk field in the North Sea, estimated at 190 million barrels, should begin production this month.

From a fundamental perspective, the company exhibits remarkable strength. Notably, the Return on Invested Capital ratio, standing at just under 50%, is the highest among its competitors.

Equinor ROI Vs. Competition
Equinor ROI Vs. Competition

Source: InvestingPro

On the technical chart, investors should closely monitor the tested zone around $33 per share. The breach of this level will serve as a significant signal indicating the potential for the upward trend to persist.

Equinor Daily Chart
Equinor Daily Chart

If you find my analyses valuable and wish to receive immediate notifications upon their publication, simply click the FOLLOW button on my profile!

***


Disclosure: The author holds no positions in any of the securities mentioned in this report.

3 Energy Giants With Over 40% Growth Potential According to InvestingPro
 

Related Articles

3 Energy Giants With Over 40% Growth Potential According to InvestingPro

Add a Comment

Comment Guidelines

We encourage you to use comments to engage with users, share your perspective and ask questions of authors and each other. However, in order to maintain the high level of discourse we’ve all come to value and expect, please keep the following criteria in mind: 

  • Enrich the conversation
  • Stay focused and on track. Only post material that’s relevant to the topic being discussed.
  • Be respectful. Even negative opinions can be framed positively and diplomatically.
  •  Use standard writing style. Include punctuation and upper and lower cases.
  • NOTE: Spam and/or promotional messages and links within a comment will be removed
  • Avoid profanity, slander or personal attacks directed at an author or another user.
  • Don’t Monopolize the Conversation. We appreciate passion and conviction, but we also believe strongly in giving everyone a chance to air their thoughts. Therefore, in addition to civil interaction, we expect commenters to offer their opinions succinctly and thoughtfully, but not so repeatedly that others are annoyed or offended. If we receive complaints about individuals who take over a thread or forum, we reserve the right to ban them from the site, without recourse.
  • Only English comments will be allowed.

Perpetrators of spam or abuse will be deleted from the site and prohibited from future registration at Investing.com’s discretion.

Write your thoughts here
 
Are you sure you want to delete this chart?
 
Post
Post also to:
 
Replace the attached chart with a new chart ?
1000
Your ability to comment is currently suspended due to negative user reports. Your status will be reviewed by our moderators.
Please wait a minute before you try to comment again.
Thanks for your comment. Please note that all comments are pending until approved by our moderators. It may therefore take some time before it appears on our website.
 
Are you sure you want to delete this chart?
 
Post
 
Replace the attached chart with a new chart ?
1000
Your ability to comment is currently suspended due to negative user reports. Your status will be reviewed by our moderators.
Please wait a minute before you try to comment again.
Add Chart to Comment
Confirm Block

Are you sure you want to block %USER_NAME%?

By doing so, you and %USER_NAME% will not be able to see any of each other's Investing.com's posts.

%USER_NAME% was successfully added to your Block List

Since you’ve just unblocked this person, you must wait 48 hours before renewing the block.

Report this comment

I feel that this comment is:

Comment flagged

Thank You!

Your report has been sent to our moderators for review
Continue with Google
or
Sign up with Email