May’s top energy stocks include TORM PLC, YPF SA and Vista Energy SAB de CV, which are up as much as 228% over the past year, while the broader energy sector has performed roughly in line with the market.
The energy sector represented by the benchmark Energy Select Sector SPDR ETF (XLE), has fallen by about 1% over the past 12 months, while Russell 1000 Index is an apartment for a year.
Below, we look at the best energy stocks in three categories: best value, fastest growing and most dynamic. All data below is as of May 5, 2023.
These are energy stocks at their lowest in the last 12 months price to earnings (P/E) ratio. A low P/E ratio indicates that you are paying less for every dollar of profit generated. Profits can be returned to shareholders in the form of dividends and share buybacks.
| Best Value Energy Stocks | |||
|---|---|---|---|
| Price ($) | Market capitalization ($B) | 12-month trailing P/E ratio | |
| Southwestern Energy Co. (SWN) | 4.74 | 5.2 | 0.8 |
| Obsidian Energy Ltd. (O BE) | 6.28 | 0.5 | 0.9 |
| SilverBow Resources Inc. (SBOW) | 22.60 | 0.5 | 1.0 |
Source: YCharts
- Southwestern Energy Co.: Southwestern Energy is an oil and gas explorer and producer with properties in Pennsylvania, Ohio, West Virginia and Louisiana. The company approved a $1 billion share buyback program in June 2022 that can continue through the end of 2023. Southwestern reported first-quarter net income of $1.9 billion and a 28% year-over-year decline in sales. Its shares have fallen by roughly a third of their value over the past year.
- Obsidian Energy Ltd: Obsidian, formerly known as Penn West Petroleum Ltd., is a Canadian energy company that explores, produces and develops oil and natural gas in the Western Canada Sedimentary Basin. In February, Obsidian named Stephen Loukas as permanent CEO after serving in the role on an interim basis for three years. The company also said it will buy back up to 8.1 million shares in 2023. Obsidian shares are down about 15% over the past year.
- SilverBow Resources Inc.: SilverBow is an oil and gas exploration, production and development company focused on properties in South Texas. The company’s stock has lost about 30% of its value over the past year due to fluctuating oil prices.
These are the best energy stocks by rating and grow a model that ranks companies based on 50/50 weights of their most recent quarterly year-over-year (YOY) percentage revenues growth and last quarterly year-on-year earnings per share (EPS) grow.
Both sales and profit are decisive factors for the company’s success. Therefore, evaluating companies by only one growth metric makes the evaluation vulnerable to accounting anomalies quarter boy (such as changes in tax laws or restructuring costs) that may cause one or the other figure to be unrepresentative of the business in general. Companies with quarterly earnings per share or revenue growth of more than 1,000% were excluded as outliers.
| Fastest growing energy stocks | ||||
|---|---|---|---|---|
| Price ($) | Market Cap ($B) | EPS growth (%) | Income growth (%) | |
| Black Stone Minerals LP (BSM) | 15.60 | 3.3 | N/A (see company description) | 379.3 |
| Archrock Inc. (AROC) | 9.92 | 1.6 | 900.0 | 16.5 |
| Chesapeake Energy Corp. (CHK) | 78.64 | 10.5 | N/A (see company description) | 362.7 |
Source: YCharts
- Black Stone Minerals LP: Black Stone owns oil and gas interests in 41 states. The company’s revenue surged last quarter year-over-year due to significant commodity derivative interest losses in the first quarter of 2022. Black Stone does not have an EPS growth figure in the table above because EPS came out of the negative. positively in the given period.
- Archrock Inc.: Archrock is a midstream natural gas compression and transportation company for energy industry customers throughout the U.S. Total revenue growth in the most recent quarter was driven by gains in both contracting operations and aftermarket services.
- Chesapeake Energy Corp.: Chesapeake is an oil and gas development and production company with operations in Louisiana, Pennsylvania and Texas. Chesapeake’s most recent quarter’s revenue rose due to losses on natural gas and oil derivatives in the prior-year quarter. The company does not have the EPS growth figure above because EPS has changed from negative to positive during the given period.
These are the energy stocks that have had the highest total return over the past 12 months.
| Energy stocks with the greatest dynamics | |||
|---|---|---|---|
| Price ($) | Market Cap ($B) | 12 month total return (%) | |
| TORM PLC (TRMD) | 29.66 | 2.5 | 228.1 |
| YPF SA (YPF) | 11.39 | 4.5 | 175.1 |
| Vista Energy SAB de CV (VISIT) | 20.41 | 1.9 | 143.3 |
| Russell 1000 Index | ON | ON | -1.2 |
| Energy Select Sector SPDR ETF (XLE) | ON | ON | -0.2 |
Source: YCharts
- PLC TORM: TORM is a tanker company that transports petroleum products worldwide while developing and manufacturing green marine equipment. Tanker stocks were boosted last year by Russia’s invasion of Ukraine, which triggered sanctions against Russia’s energy industry and a spike in oil prices.
- YPF SA: YPF is an Argentine oil and gas company that is predominantly state-owned. It explores, produces, transports, refines and markets various oil and gas products. YPF’s top and bottom line growth has been strong in recent quarters, despite runaway inflation in Argentina.
- Vista Energy SAB de CV: Vista Energy is a Mexican oil and gas producer with properties in Mexico and Argentina.
Benefits of investing in energy stocks
Two key reasons to invest in the energy sector are the size of the market and the sector’s recent returns.
Market size: With the world relying on energy to power everything from cars to factories and almost everything in between, it’s no wonder the global energy market has been valued at around $6 trillion in recent years. The energy market also offers many subsectors to invest in, including exploration, storage, renewables, generation, transportation and distribution.
Growth potential: The UN estimates that the world needs to invest $2.4 trillion a year in energy systems by 2035 to achieve The Paris Climate Agreement goals. The global transition from fossil fuels to renewable energy sources is giving investors an opportunity to invest in energy startups seeking a share of the huge market.
Risks of investing in energy stocks
Energy stocks also come with potential downside. Two industry-wide risks to consider are:
A shift away from fossil fuels: Climate change awareness and increased focus on environmental, social and governance Investment practices (ESG) could threaten the long-term viability of traditional energy companies. The U.S. Environmental Protection Agency says climate change could contribute to power system stress, power distribution problems and disruption to the overall energy industry, among other issues.
Ecological accidents: Energy companies may occasionally experience major environmental accidents. These are harmful not only from the point of view of public relations, but can also endanger business. The Deepwater Horizon oil well explosion and spill in April 2010 led BP Plc (BP) to pay more than $6 billion in settlements over the next two years.
