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The energy sector is comprised of companies focused on the exploration, production, and marketing of oil, gas, and renewable resources around the world. Popular energy sector stocks include upstream companies that are primarily engaged in the exploration of oil or gas reserves. Well-known companies are Devon Energy Corp. (DVN) and Concho Resources Inc. (CXO). Downstream companies include HollyFrontier Corp. (HFC), which refines and processes oil and gas products for delivery to consumers.
The early 2020 oil price war and the COVID-19 pandemic drove oil prices to record lows in April and sharply pushed down energy stocks, as represented by the Energy Select Sector SPDR ETF (XLE). XLE has risen from its bottom in March, but has still drastically underperformed the broader market. It has provided a total return of -27.9% over the past 12 months, well below the Russell 1000’s total return of 20.6%, as of December 16, 2020. All statistics in the tables below are as of December 17.
Here are the top 3 energy stocks with the best value, the fastest growth, and the most momentum.
Best Value Energy Stocks
These are the energy stocks with the lowest 12-month trailing price-to-earnings (P/E) ratio. Because profits can be returned to shareholders in the form of dividends and buybacks, a low P/E ratio shows you’re paying less for each dollar of profit generated.
Source: YCharts
- Valvoline Inc.: Valvoline is a manufacturer and distributor of automotive lubricants and chemicals. The company produces motor oil, antifreeze, brake fluid, grease products, and more. Valvoline announced in early December that it had agreed to purchase 27 oil-change service stations from Car Wash Partners Inc. Financial terms of the agreement were not disclosed and the transaction is expected to close before the end of the year.
- Cheniere Energy Inc.: Cheniere Energy is an energy company focused on liquefied natural gas (LNG). It owns and operates LNG terminals and pipelines. On November 6, Cheniere Energy reported a net loss attributable to its common stockholders of $463 million as revenue fell 32.7% for Q3 2020, which ended September 30, 2020. It was a significant change from the net loss of $318 million in the year-ago quarter. Cheniere noted that it temporarily suspended operations at its Sabine Pass LNG terminal during the quarter due to Hurricane Laura.
- ONEOK Inc.: ONEOK focuses exclusively on the gathering, processing, storage, and transportation of natural gas in the United States.
Energy Stocks With the Most Profit Growth or Least Profit Decline
These are the energy stocks with the highest year-over-year (YOY) earnings per share (EPS) growth or lowest EPS decline for the most recent quarter. A company’s ability to maintain profitability in a difficult business environment can be a sign of good management and/or a strong business model.
| Energy Stocks With the Most Profit Growth or Least Profit Decline | |||
|---|---|---|---|
| Price ($) | Market Cap ($B) | EPS Growth (%) | |
| Valvoline Inc. (VVV) | 23.33 | 4.3 | 371.4 |
| Williams Companies Inc. (WMB) | 21.75 | 26.4 | 38.9 |
| ONEOK Inc. (OKE) | 40.65 | 18.1 | -5.4 |
Source: YCharts
- Valvoline Inc.: See above for company description.
- Williams Companies Inc.: Williams Companies is an energy infrastructure company operating natural gas pipelines across North America. On November 2, the company reported net income growth of 33.5% despite a 3.3% decline in revenue in Q3 2020, which ended September 30, 2020. Net income was boosted by lower costs and expenses than in the same quarter a year ago.
- ONEOK Inc.: See above for company description.
Energy Stocks with the Most Momentum
These are the energy stocks that had the highest total return over the last 12 months.
Source: YCharts
- Antero Midstream Corp.: Antero Midstream owns, operates, and develops midstream energy assets. It operates gathering pipelines and compressor stations, and operates water distribution, clearwater facility, fractionation, and pipeline safety services.
- EQT Corp.: EQT is an integrated energy company focused on natural gas production, gathering, and transmission in the Appalachian region. The company explores for and produces natural gas, natural gas liquids, and crude oil. EQT announced in late October that it has entered an agreement with Chevron U.S.A. Inc. to acquire Chevron’s upstream and midstream assets in the Appalachian Basin for $735 million. The transaction is expected to close by the end of the current quarter.
- Valvoline Inc.: See above for company description.
