The demand for oil and other products that the integrated giants produce will continue to skyrocket. After a giant run over the past year, investors finally are getting a chance to step in and grab some of the best companies in the industry.
Spot prices for both Brent and West Texas Intermediate crude have dropped dramatically from the recent highs, and absurd attempts to lower the price at the pump by initiating a three-month moratorium on the federal gas tax, as well as lecturing from the White House and the Energy Secretary on how the companies are “greedy,” have helped to chop the industry giants down even more.
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We screened our 24/7 Wall St. energy database looking for value in the mega-cap integrated energy and refining giants and found eight top stocks that have backed up in price and are very enticing buys now for growth and income investors. All pay reliable (in some cases outsized) dividends. All are rated Buy at many major firms across Wall Street and can be bought in front of upcoming dividend ex-dates.
It is important to remember that no single analyst report should be used as a sole basis for any buying or selling decision.
BP
This is one of the premier European integrated oil giants and the Goldman Sachs analysts are very positive on the shares. BP PLC (NYSE: BP) engages in the energy business worldwide. It produces and trades in natural gas; offers biofuels; operates onshore and offshore wind power and solar power generating facilities; and provides de-carbonization solutions and services, such as hydrogen and carbon capture, usage and storage.
The company is also involved in the convenience and mobility business, which manages the sale of fuels to wholesale and retail customers, convenience products, aviation fuels, and Castrol lubricants. It is involved in refining, supply and trading of oil products, as well as operation of electric vehicle charging facilities. In addition, it produces and refines oil and gas, and it invests in upstream, downstream and alternative energy companies, as well as in advanced mobility, bio and low carbon products, carbon management, digital transformation and power and storage areas.
Shareholders receive a 4.72% yield. The Goldman Sachs price target for domestic shares of BP stock is $45. That compares with the $38.14 consensus target and the closing price of $27.36 a share on Thursday.
24/7 Wall St.Chevron
This integrated giant is a safer way for investors looking to get positioned in the energy sector, as it has a solid position when it comes to natural gas. Chevron Corp. (NYSE: CVX) engages in integrated energy and chemicals operations worldwide.
The Upstream segment is involved in the exploration, development, production and transportation of crude oil and natural gas; processing, liquefaction, transportation and regasification associated with liquefied natural gas (LNG); transportation of crude oil through pipelines; and transportation, storage and marketing of natural gas, as well as operating a gas-to-liquids plant.
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The Downstream segment engages in refining crude oil into petroleum products; marketing crude oil, refined products and lubricants; manufacturing and marketing of renewable fuels; transporting crude oil and refined products by pipeline, marine vessel, motor equipment and rail car; and manufacturing and marketing of commodity petrochemicals, plastics for industrial uses, and fuel and lubricant additives. It is also involved in cash management and debt financing activities, insurance operations, real estate activities and technology businesses.
The company sports a sizable 4.00% dividend. Credit Suisse has a $202 target price, and the consensus target on Chevron is $179.55. The shares closed on Thursday at $142.43.
ConocoPhillips
This is another large-cap company that offers strong value for investors. ConocoPhillips (NYSE: COP) explores for, produces, transports and markets crude oil, bitumen, natural gas, LNG and natural gas liquids (NGLs) worldwide.
Conoco’s portfolio includes resource-rich North American tight oil and oil sands assets; lower-risk legacy assets in North America, Europe, Asia and Australia; various international developments; and an inventory of conventional and unconventional exploration prospects.
Many Wall Street analysts feel Conoco can accelerate growth from a reloaded portfolio depth in the Bakken and Eagle Ford with visibility on future growth from a sizable position in the Permian.
ConocoPhillips stock investors receive a 2.00% dividend. The Barclays price target of $142 is higher than the $126.61 consensus price target. Thursday’s $87.89 per share close was down almost 6% for the day.
24/7 Wall St.Exxon Mobil
Despite the huge rally in oil, this mega-cap energy leader trades at levels printed in 2015 and still offers investors an excellent entry point. Exxon Mobil Corp. (NYSE: XOM) is the world’s largest international integrated oil and gas company. It explores for and produces crude oil and natural gas in the United States, Canada, South America, Europe, Africa and elsewhere.
Exxon also manufactures and markets commodity petrochemicals, including olefins, aromatics, polyethylene and polypropylene plastics, and specialty products, and it transports and sells crude oil, natural gas and petroleum products.
Top Wall Street analysts expect Exxon to remain a key beneficiary in this higher oil price environment, and most remain strongly positive about the company’s sharp positive inflection in capital allocation strategy, upstream portfolio, and leverage to a further demand recovery, with Exxon Mobil offering greater downstream/chemicals exposure relative to peers.
Exxon Mobil stock comes with a 4.13% dividend, which will continue to be defended. The $120 BofA Securities target price is well above the $100.97 consensus target and Thursday’s close at $85.21.
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Marathon Petroleum
This is another solid way for investors who are more conservative to play the energy sector. Marathon Petroleum Corp. (NYSE: MPC) operates as an integrated downstream energy company, primarily in the United States.
Its Refining & Marketing segment refines crude oil and other feedstocks at its refineries in the Gulf Coast, Mid-Continent and West Coast regions of the United States. It purchases refined products and ethanol for resale. Its refined products include transportation fuels, such as reformulated and blend-grade gasolines, as well as heavy fuel oil and asphalt.
This segment also manufactures aromatics, propane, propylene and sulfur. It sells refined products to wholesale marketing customers in the United States and internationally, buyers on the spot market and independent entrepreneurs who operate primarily Marathon branded outlets, as well as through long-term fuel supply contracts to direct dealer locations primarily under the ARCO brand.
The Midstream segment transports, stores, distributes and markets crude oil and refined products through refining logistics assets, pipelines, terminals, towboats and barges. It gathers, processes and transports natural gas, and it gathers, transports, fractionates, stores and markets NGLs. As of December 31, 2021, the company operated 7,159 brand jobber outlets in 37 states, the District of Columbia and Mexico through independent entrepreneurs.
Shareholders receive a 2.75% dividend. Marathon Petroleum stock’s price target at BofA Securities price target is $135. The consensus target is lower at $119.21, and shares closed nearly 5% lower on Thursday at $84.63.
24/7 Wall St.Shell
This is another European energy giant that offers investors size and strength. Shell PLC (NYSE: SHEL) operates as an energy and petrochemical company in Europe, Asia, Africa, the Americas and elsewhere.
Shell explores for and extracts crude oil, natural gas and NGLs. It markets and transports oil and gas, produces gas-to-liquids fuels and other products, and operates upstream and midstream infrastructure necessary to deliver gas to market. The company also markets and trades natural gas, LNG, crude oil, electricity and carbon-emission rights, and it markets and sells LNG as a fuel for heavy-duty vehicles and marine vessels.
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In addition, the company trades in and refines crude oil and other feed stocks, such low-carbon fuels, lubricants, bitumen, sulfur, gasoline, diesel, heating oil, aviation fuel and marine fuel. It produces and sells petrochemicals for industrial use, and it manages oil sands activities. Further, the company produces base chemicals, comprising ethylene, propylene and aromatics, as well as intermediate chemicals, such as styrene monomer, propylene oxide, solvents, detergent alcohols, ethylene oxide and ethylene glycol.
The company also generates electricity through wind and solar resources, produces and sells hydrogen, and provides electric vehicle charging services, as well as electricity storage.
The dividend yield is 3.65%. BofA Securities has set a $70 target price. The consensus target is $69.78. The final Shell stock trade on Thursday was reported at $49.17.
24/7 Wall St.TotalEnergies
This French integrated giant is another great way to play an energy rally from the European side. TotalEnergies S.E. (NYSE: TTE) operates as an integrated oil and gas company worldwide. Its Exploration & Production segment engages in oil and natural gas exploration and production activities in approximately 50 countries.
The Integrated Gas, Renewables & Power segment engages in the LNG production, shipping, trading and regasification activities; trading of liquefied petroleum gas (LPG), petcoke and sulfur, natural gas and electricity; transportation of natural gas; electricity production from natural gas, wind, solar, hydroelectric and biogas sources; energy storage activities; and development and operation of biomethane production units, as well as provides energy efficiency services.
The Refining & Chemicals segment refines petrochemicals, including olefins and aromatics; and polymer derivatives, such as polyethylene, polypropylene, polystyrene and hydrocarbon resins, as well as biomass conversion and elastomer processing. This segment also engages in trading and shipping crude oil and petroleum products.
The Marketing & Services segment produces and sells lubricants; supplies and markets petroleum products, including bulk fuel, aviation and marine fuel, special fluids, compressed natural gas, LPG and bitumen; and provides fuel payment solutions. It operates approximately 15,500 service stations.
Investors receive a 4.70% dividend. The BofA Securities price target is $80, the consensus target is $63.81 and TotalEnergies stock ended Thursday trading at $50.16 a share.
Valero Energy
This Wall Street favorite is a solid energy play for conservative investors looking for safer ideas. Valero Energy Corp. (NYSE: VLO) is one of the largest independent petroleum refining and marketing companies in the United States. It is based in San Antonio, Texas; owns 13 refineries in the United States, Canada and Europe; and has a total throughput capacity of around 2.5 million barrels per day.
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The company also is a joint venture partner in Diamond Green Diesel, which operates a renewable diesel plant in Norco, Louisiana. Diamond Green Diesel is North America’s largest biomass-based diesel plant.
Valero sells its products in the wholesale rack or bulk markets in the United States, Canada, the United Kingdom, Ireland and Latin America. Approximately 7,400 outlets carry Valero’s brand names.
Investors receive a 4.69% dividend. The Wells Fargo analysts have a price target of $166. The consensus target for Valero Energy stock is $137.68, and shares closed on Thursday at $104.53. That was down almost 8% for the day.
These eight energy sector giants can continue to profit from elevated energy prices but offer investors who are more conservative a way to play the sector. With everything from the world’s largest integrated energy giants, to one of the biggest refining companies, these are ways to generate income and participate in the biggest rally in the energy and oil space since 2011.
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