Energy Stocks: A Roaring Success Story
The energy sector has been on a tear this year, with most stocks experiencing significant gains. Despite this rally, some energy stocks still offer compelling value for investors. Here, we’ll explore three energy stocks that Fool.com contributors believe have the potential to deliver high-octane total returns.
A Leader in the Pack: Chevron
Chevron, an integrated energy major, boasts a market cap of $275 billion and a diversified portfolio spanning upstream, midstream, and downstream operations. Its financial strength is evident in its low debt-to-equity ratio of 0.17 times. Furthermore, Chevron has an impressive history of annual dividend increases, stretching over three decades. Although the company has lagged behind its peers in recent times, its current undervaluation presents a buying opportunity. Even if its proposed acquisition of Hess faces hurdles, Chevron can pivot and explore alternative growth strategies.
MPLX: A High-Yielding Gem
MPLX, a master limited partnership (MLP), has seen its units surge by 25% this year. Despite this rally, the stock still offers an attractive 8% yield, making it an appealing investment opportunity. MPLX’s valuation remains relatively low, with a price-to-earnings ratio of around 10 times. The company’s distribution growth has been impressive, with a 12.5% increase recently. Its cash-rich balance sheet, combined with a low leverage ratio, positions MPLX for continued growth.
Occidental Petroleum: A Turnaround Story
Occidental Petroleum’s shares have underperformed this year, falling 15%. However, the company’s recent acquisition of CrownRock has boosted cash flows and accelerated debt repayment. Occidental’s strong Q3 profits, despite declining commodity prices, demonstrate its ability to generate cash. With a commitment to divesting assets and repaying debt worth $4.5 billion, Occidental is poised to strengthen its balance sheet. This turnaround story presents an attractive buying opportunity for investors seeking exposure to the energy sector.
Investing in Energy Stocks? Consider This
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