Watch These 3 Energy Stocks With Fortress Balance Sheet

The initial pandemic period, when there were no vaccines, saw an environment of heightened uncertainties. The price of crude oil plunged to a negative $36.98 per barrel on Apr 20, 2020. However, with the rapid developments of vaccines, which led to the gradual opening of the economies, the pricing scenario of West Texas Intermediate crude improved drastically over time to reach $123.64 per barrel on Mar 8, 2022. Oil price data are per the U.S. Energy Information Administration, and currently, the WTI oil price is approaching $80 per barrel.

Thus, it’s pretty apparent that the business model of most energy players, by nature, is exposed to extreme volatility in commodity prices. Energy companies with robust balance sheets will be better positioned to navigate these uncertainties.

Hence, it would be wise for investors to keep an eye on promising stocks like Exxon Mobil Corporation XOM, ConocoPhillips COP and Diamondback Energy, Inc. FANG. All the stocks carry a Zacks Rank #3 (Hold) and have significantly lower debt exposure than the composite stocks belonging to the respective industries.

You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

ExxonMobil has a strong balance sheet, hence it can withstand adverse business environments. The integrated energy player has a total debt-to-capitalization of 16.4%. Thus, compared to the 24% debt-to-capitalization of composite stocks belonging to the Zacks Oil & Gas Integrated International industry, ExxonMobil is better off.

In fact, the energy giant has been consistently witnessing a lower debt-to-capitalization ratio than the industry over the past three years. 

ConocoPhillips has achieved a promising production outlook by leveraging its extensive drilling inventory and diversified upstream assets. Compared to composite stocks belonging to the industry, the leading upstream energy company has considerably lower exposure to debt capital. This reflects that the company is better positioned to rely on its strong balance sheet to withstand any adverse business scenario.

Diamondback Energy, a leading pure-play Permian operator, has reported ongoing enhancements in the average productivity per well in the Midland Basin. The exploration and production company is likely to continue witnessing increased production volumes. FANG also has an investment-grade balance sheet and a lower debt-to-capitalization ratio than the composite stocks belonging to the industry over the past years.

Infrastructure Stock Boom to Sweep America

A massive push to rebuild the crumbling U.S. infrastructure will soon be underway. It’s bipartisan, urgent, and inevitable. Trillions will be spent. Fortunes will be made.

The only question is “Will you get into the right stocks early when their growth potential is greatest?”

Zacks has released a Special Report to help you do just that, and today it’s free. Discover 5 special companies that look to gain the most from construction and repair to roads, bridges, and buildings, plus cargo hauling and energy transformation on an almost unimaginable scale.

Download FREE: How To Profit From Trillions On Spending For Infrastructure >>

Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report

Exxon Mobil Corporation (XOM) : Free Stock Analysis Report

ConocoPhillips (COP) : Free Stock Analysis Report

Diamondback Energy, Inc. (FANG) : Free Stock Analysis Report

To read this article on Zacks.com click here.

Zacks Investment Research

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

More Related Articles

Info icon

This data feed is not available at this time.

Sign up for the TradeTalks newsletter to receive your weekly dose of trading news, trends and education. Delivered Wednesdays.