Energy prices have soared this year, and there has been a lot of focus on the different options for powering our homes, offices and cars. Energy stocks in general have performed much better than the rest of the market this year — it’s one of the few sectors that is up overall — but it’s not too late to get on board.
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Here are some of the best energy stocks for 2022.
Oil and Gas Stocks
With gas prices rising, it’s no wonder the companies that produce gas are doing well. Consumers may be feeling pain at the pump, but investors who hold oil and gas stocks are doing well. Here are some oil and gas stocks that are having a great year.
ConocoPhillips (COP) is an oil and gas exploration, production and transportation company headquartered in Texas, with operations in 13 countries worldwide.
ConocoPhillips stock has risen 52.3% so far this year, closing on Sept. 13 at $112.33. That’s one reason the analysts like it: Of the 21 who follow COP, six rated it a strong buy, nine rated it a buy and six recommend holding it, according to Yahoo Finance. The average 12-month price target is $124.26.
Another reason it’s popular is that when the company reported second-quarter earnings on Aug. 4, it announced $15 billion in return of capital in 2022, as well as a third-quarter dividend of $0.46 per share and a fourth-quarter variable return of cash payment of $1.40 per share.
Chevron (CVX) is an upstream (exploration and production), midstream (transportation), and downstream (refining and retail) oil company. It drills in the U.S. Gulf of Mexico, and offshore Western Australia and West Africa. After transporting and refining crude oil, it sells gasoline to consumers at Chevron, Texaco and Caltex gas stations. The company produces other products and services for industrial, commercial and consumer applications.
Chevron’s stock closed at $159.41 on Sept. 13, up from $119.26 in January, for an impressive 33.66% year-to-date return. Sixteen of 24 analysts rate it a buy or a strong buy, seven recommend holding it, and one rates it an underperformer. The average 12-month price target is $181.52.
When the company announced its second-quarter earnings, it increased its share repurchase guidance to up to $15 billion. It also announced a quarterly dividend of $1.42.
Occidental Petroleum Corp. (OXY) has oil and gas assets in the U.S., Africa, the Middle East and Latin America. The company is focused on providing traditional energy sources in a low-carbon environment. Warren Buffett has been buying up shares of Oxy for Berkshire Hathaway and holds a stake of over 20% of the company as of early September, according to U.S. News & World Report.
As of Sept. 13, OXY was trading at $65.34, close to its 52-week high of $77.13. Most analysts (15 out of 24) recommend holding it, one says it’s underperforming, and one advises selling. But three analysts call it a buy, and four say it’s a strong buy. The average 12-month price target is $76.04.
Renewable Energy Stocks
The recent increase in gas prices and the impact of climate change have combined to make renewable energy a top priority for many governments — and for investors. Here are some of the top renewable energy stocks this year.
Brookfield Renewable Partners
Brookfield Renewable (BEP) has hydroelectric, wind and solar power, as well as storage facilities, in North America, South America, Asia and Europe. With renewable energy top of mind for many, the company has good prospects.
As of Sept. 13, Brookfield Renewable stock was up for the year, although not by a whole lot. It began the year at $35.85 and closed on Sept. 13 at $37.72. But it is up for the year, which is a rarity in this market. Of the 12 analysts who followed the stock in August, one called it a strong buy, nine rated it a buy and two recommended holding the stock. The average of the analysts’ estimates of its price a year from now is $41.88.
First Solar (FSLR) manufactures photovoltaic modules for solar panels. The company claims to have the best environmental profile in the industry, using less energy, water and semiconductor material than its competitors.
First Solar stock is up over 50% since the beginning of the year and is currently trading right around its new 52-week high of $140.14. Analysts are a little lukewarm on this stock, however, with eight recommending investors hold the stock, while six call it a buy and three call it a strong buy. The average 12-month price target is $132.50, but the highest target is $187.00.
Plug Power (PLUG) provides an end-to-end green hydrogen ecosystem that uses renewable electricity and water to produce carbon-free green hydrogen, using electrolyzers. The company then transports the green hydrogen from its plants to industrial, commercial and medical users worldwide, using cryogenic trailers and mobile storage units.
Plug Power stock hasn’t increased in value much this year, but it hasn’t fallen either. As of Sept. 13, it closed at $28.91, compared to $28.79 at the beginning of the year. In August, 29 analysts followed the stock. Six rated it a strong buy and 15 rated it a buy. Eight analysts recommended holding it. The average 12-month price target is $37.10, but one analyst expects the price to go to $78.00 in a year.
Producers of electricity and gas utilities will always be in demand as the population grows and more and more energy is required. Utility stocks are often considered defensive; that is, they historically outperform many other sectors in a down market. Here is one of the best utility stocks this year.
Southern Company (SO) provides electricity to customers in three states and natural gas to customers in four, totaling 9 million homes and businesses. It is the parent company of electric companies Alabama Power, Georgia Power and Mississippi Power, and of natural gas companies Southern Company Gas, Atlanta Gas Light, Chattanooga Gas, Nicor Gas and Virginia Natural Gas. It is also the parent company of Southern Nuclear, Southern Power, PowerSecure, Southern Telecom and Southern Linc.
Southern Company closed at $78.23 on Sept. 13, very close to its 52-week high of $80.57 and significantly above where it started the year, which was at $68.17. Analysts aren’t fully behind the company, however, with one analyst calling it a strong buy, four recommending it as a buy, eight advising investors to hold the stock, two calling it an underperformer and two recommending selling.
Whether you want to invest in the best energy stocks, the best power stocks or the best clean energy stocks, these are good places to start. The demand for energy, especially clean energy, will only increase, and these stocks tend to do well even when the rest of the market does not, making them a good buy in a bear market.
Data was compiled on Sept. 14, 2022, and is subject to change. Information on analyst ratings was sourced from Yahoo Finance.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.