A Futures Focus: The Top Performing Energy Stocks

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Since oil prices collapsed, many investors have avoided investing in the energy sector. However, savvy investors know that a dip in share prices now doesn’t necessarily mean the companies behind those stocks are failing.

Instead, a smart investor will view cheaper energy stock prices during a bear market as an opportunity to snap up a bargain and cash in on the profits later. Some analysts report that oil may recover to a price of up to $60 per barrel throughout spring of this year.

If oil prices begin to recover, chances are oil exploration and drilling companies could realize greater profits, improved cash flow, better price-to-earnings ratio (P/E) and stronger operational positions, all of which could see energy share prices driven up sharply. Seeking investment advice from companies that specialize in the energy sector is a great start.

However, if you’re trying to pick a winning stock on your own, the difficulty lies in knowing which energy companies to sink your investment hopes into.  Here are some of the top performing energy stocks to consider adding to your investment portfolio.

Exxon Mobil Corporation (XOM)

Throughout 2016, Exxon Mobil stocks rose by 11.9%, outperforming the S&P 500 index growth of 7.2% significantly. Analysts predict that the company’s stock is poised to continue growing throughout 2017.

There’s also the healthy dividend yield to take into account. At around 3.4% dividend yield, investors holding stocks in order to reap the benefits of the dividend earnings can take heart that the dividend rate has increased for 33 consecutive years.

Chevron Corporation (CVX)

Chevron’s stock prices opened trading in early January 2017 at $118.38 per share and have since plummeted to $106.28 at the end of March 2017. However, the company’s refining operations are experiencing profit growth. The company is also spending up big replacing old wells and striving to boost oil and gas production throughout the rest of the year.

Management also worked to slash Chevron’s expenses to ensure shareholders’ dividend yields were protected. To a savvy investor, the slump in stock prices could represent a bargain buy.

Helmerich & Payne (HP)

Helmerich & Payne’s stock prices have slumped from opening the 2017 trading year at $78.52 down to $64.78 by the end of March. However, the contract oil and gas drilling company remains one of the more promising energy stocks to invest in for this year, with plenty of room for growth still to come.

Investors seeking healthy dividend yields can increase profits by taking advantage of earning more than 4.3% on dividends. Movement from institutional investors is also worth noting. Large investors, such as hedge funds, mutual funds, and retirement funds, also tend to sink their cash into promising companies with good dividend yields. As the NASDAQ conveniently lists the stocks owned, bought and sold by all institutional investors, it’s easy to see where many of the large investment firms are putting their funds.

Chesapeake Energy (CHK)

If you’ve read the news reports in the past couple of years, it would seem on the surface that Chesapeake Energy has experienced some turbulent times. Share prices have plummeted from lofty heights of $21 per share in March 2015 down to just $5.39 in March 2017.

However, while the slump in prices might seem alarming at first, consider the benefits. The company spent most of the last year re-negotiating its debt-laden balance sheet, selling assets to pay down some of those debts and acquiring new shale basin assets with the intention of improving production.

If oil prices rebound the way analysts anticipate, there is plenty of opportunity for share prices to follow suit.

Schlumberger Limited (SLB)

Purchasing shared in oil fields services companies such as Schlumberger Limited can be a smart move for many investors. As many of the oil and gas drilling and exploration companies begin to spend money expanding their operations in the hopes of oil prices recovering, each of those companies will increasingly rely on companies like Schlumberger to service their needs on the oil fields. Offering a healthy dividend yield of 2.55%, the company still represents value for long-term investors.

Investing in the energy sector offers plenty of risks and rewards for smart investors seeking to capitalize on future growth opportunities. After all, stock prices in the energy sector are largely fueled by supply and demand. While oil prices are low, it’s logical that company earnings reflect that dip.  However, as oil prices begin to recover and company profits start to increase again, savvy investors who buy in while share prices are low are set to benefit from future increases in stock prices.

Ruby Tomlinson shares her insights and top tips on making good investments. Her writings can be found on investment and financial blogs as well as some personal finance blogs.