Top Energy Stocks for June 2022

The energy sector is composed of companies focused on the exploration, production, and marketing of oil, gas, and renewable resources around the world. Energy sector stocks include upstream companies that primarily engage in the exploration of oil or gas reserves, such as Devon Energy Corp. Downstream companies include Marathon Petroleum Corp., which refines and processes oil and gas products for delivery to consumers. Among the industry’s biggest players are Chevron Corp. and ExxonMobil Corp.

Oil and gas prices have spiked due to Russia’s invasion of Ukraine. Brent crude oil prices have jumped to more than $100 per barrel ($110.21 per barrel as of May 28, 2022), the highest level since 2014. In response to the invasion, Germany has halted the Nord Stream 2 gas pipeline project, which was expected to double the flow of Russian gas to Germany.

Energy stocks, as represented by an exchange-traded fund (ETF)—the Energy Select Sector SPDR ETF (XLE)—have dramatically outperformed the broader market, posting a total return of 59.28% over the past 6 months compared to the Russell 1000 Index’s total return of -10.95%. These market performance numbers and all statistics in the tables below are as of May 20, 2022.

Below are the top three energy stocks with the best value, the fastest growth, and the most momentum.

These are the energy stocks with the lowest 12-month trailing price-to-earnings (P/E) ratios. Because profits can be returned to shareholders in the form of dividends and buybacks, a low P/E ratio shows that you’re paying less for each dollar of profit generated.

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• Marathon Petroleum Corp.: Marathon is a crude oil refining company. Serving customers across the U.S., the company refines, supplies, transports, and sells petroleum products.
• APA Corp.: APA is an oil and gas exploration and production company. It has operations in the U.S., Egypt’s Western Desert, and the U.K.’s North Sea. It also has exploration opportunities offshore of Suriname. The company announced in mid-March that it closed on two transactions, which generated net proceeds of approximately $1 billion. On March 7, the company’s subsidiaries sold assets operating in the Delaware Basin for approximately $805 million. On March 11, one of APA’s subsidiaries sold 4 million shares of Kinetik class A common stock for net proceeds of $224 million.
• Diamondback Energy Inc.: Diamondback Energy is an independent oil and natural gas company. It focuses on the acquisition, development, and exploration of onshore oil and natural gas reserves in the Permian Basin. The company recently announced that it has agreed to acquire all of the publicly held common units representing the limited partner interests in Rattler Midstream LP that it does not already own. The all-stock transaction implies a premium of 17.3% for Rattler common units based on the closing prices of Rattler’s common units and Diamondback’s common stock as of May 13, 2022.

These are the top energy stocks as ranked by a growth model that scores companies based on a 50/50 weighting of their most recent quarterly year-over-year (YOY) percentage revenue growth and most recent quarterly YOY earnings-per-share (EPS) growth. Both sales and earnings are critical factors in the success of a company. Therefore, ranking companies by only one growth metric makes a ranking susceptible to the accounting anomalies of that quarter (such as changes in tax law or restructuring costs) that may make one figure or the other unrepresentative of the business in general. Companies with quarterly EPS or revenue growth of more than 2,500% were excluded as outliers.

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• Marathon Oil Corp.: Marathon Oil is an independent energy company focused on the exploration and production of oil and gas. The company’s operations are located in four of the major resource plays in the U.S.—Eagle Ford, Bakken, STACK/SCOOP, and Permian—as well as operations in Equatorial Guinea. Marathon Oil announced in late April that its board of directors has approved a quarterly dividend of $0.08 per share, representing an approximate 15% increase from the company’s last quarterly base dividend. The dividend is payable on June 10, 2022, to stockholders of record as of May 18, 2022.
• Coterra Energy Inc.: Coterra Energy is an independent oil and gas exploration and production company with operations focused in the Permian Basin, Marcellus Shale, and Anadarko Basin.
• ConocoPhillips: ConocoPhillips is an independent energy company engaged in the exploration and production of oil and natural gas. The company explores for, produces, and transports crude oil, natural gas, natural gas liquids (NGLs), liquefied natural gas, and bitumen.

These are the energy stocks that had the highest total return over the past 12 months.

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• Devon Energy Corp.: Devon Energy is an independent oil and natural gas exploration and production company. Its operations are focused on five core areas: the Delaware Basin, Eagle Ford, Anadarko Basin, Powder River Basin, and Williston Basin. The company announced in early May that its board of directors approved a fixed-plus-variable dividend of $1.27 per share, representing a 27% increase from the previous quarter. The dividend is payable on June 30, 2022, to shareholders of record as of June 13, 2022. Devon Energy also said that it was expanding its share repurchase program by 25% to $2.0 billion. The program was extended through to May 4, 2023.
• Occidental Petroleum Corp.: Occidental Petroleum is an oil and gas exploration and production company. The company explores for and produces oil, NGLs, and natural gas. It also transports and stores oil and natural gas and manufactures basic chemicals and vinyls.
• Marathon Oil Corp.: See above for company description.

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