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Oil prices might not go up forever, but right now oil is the profitable stock market play with exceptional year-to-date returns. Here are some of the top oil stock picks that could continue to perform well for the rest of 2022.
Top 8 Oil Stocks To Consider in 2022
Here’s a short breakdown of each of the picks, along with their current price and market capitalization.
|Occidental Petroleum Corporation (OXY)||$57.87||$56.49 billion|
|Exxon Mobil Corporation (XOM)||$91.48||$399.79 billion|
|Shell plc (SHEL)||$52.45||$202.13 billion|
|Marathon Petroleum Corporation (MPC)||$91.36||$53.50 billion|
|Marathon Oil Corporation (MRO)||$24.90||$19.86 billion|
|Imperial Oil Limited (IMO)||$50.42||$35.10 billion|
|Suncor Energy Inc. (SU)||$37.25||$54.61 billion|
|Liberty Energy Inc. (LBRT)||$13.77||$2.76 billion|
1. Occidental Petroleum Corporation (OXY)
Occidental is one oil stock that many have added to their watchlist in 2022. There’s good reason for this, as the company has had the backing of the “Oracle of Omaha” himself, Warren Buffett. For those unaware, Buffett is renowned in financial circles as the greatest investor of all time.
Berkshire Hathaway, Buffett’s company, currently holds a 15.2% stake in Occidental. Since initiating a position, Berkshire Hathaway has not only retained its entire stake but has added to it along the way.
If that’s not enough to sway investors, the financials might. OXY has gone from a net loss of $346 million in Quarter 1 2021 to net income of $4.67 billion in Quarter 1 2022.
This radical increase has boosted OXY’s valuation considerably, but the stock still sits at an attractive price-to-earnings ratio of 8.65.
If that’s not enough, the company also offers investors a 0.93% forward annual dividend yield and has a healthy $1.91 billion on its balance sheet.
- YTD return: Approx. 143%
- Backed by experts
- Attractive P/E multiple
- Decent cash pile
- 0.93% dividend
- Stock price appreciation may not be sustainable
2. Exxon Mobil Corporation (XOM)
Exxon is the largest oil and gas company in the U.S. by total revenue. It reported $8.87 billion in net income in February 2022, its largest quarterly profit in seven years.
Following a drastic drop in 2020 due to pandemic-induced declines in demand for oil, Exxon has retraced to a valuation the stock hasn’t seen since 2014. Just recently, Exxon surpassed these levels to reach a new all-time high.
Despite a higher P/E ratio than some others at 15.17, Exxon has a long-term track record of several decades of strong returns. It provides a dividend of 4.09% for its investors, and it’s unlikely to go under anytime soon.
- YTD return: Approx. 68%
- Long-standing history and industry experience
- Record profits in 2022
- 4.09% dividend
- Higher P/E ratio than most
3. Shell plc (SHEL)
Shell is one of Europe’s largest companies. Similar to Exxon, it has produced record profits in 2022, but even more so. Shell’s most recent $9.13 billion quarterly profit was the largest in the company’s history.
Recognized internationally due to its familiar red and yellow logo, Shell also has one of the strongest brands on this list. With the company’s roots dating back as far as the 1830s, Shell is one of the most experienced companies in the oil industry, and it’s reasonable to assume it will retain its leadership position in the E.U.
Additionally, Shell is one of the oil stocks with the best value. It has a low P/E ratio of 9.45 as well as a 3.62% dividend yield. Cash on hand equates to $38.36 billion, a reasonably large sum for a stock valued at roughly $202.13 billion.
- YTD return: Approx. 42%
- Long-standing history and extensive industry experience
- Low P/E ratio
- Massive cash pile
- 3.62% dividend
- Underperforming peers YTD
4. Marathon Petroleum Corporation (MPC)
Marathon Petroleum is the largest oil refiner in the U.S. Roughly 2.9 billion barrels of oil are refined every day. On top of its refining business, MPC has taken control of separate distribution channels.
It owns Speedway, the second-largest convenience store chain in the country. Speedway operates more than 2,700 stores nationwide with a presence in 21 states.
Even after a stellar performance YTD, MPC has a low P/E ratio of just 5.21 and a mountain of cash on its balance sheet — $10.6 billion as it stands. It has beat analyst estimates for more than four quarters and also offers a 2.66% dividend yield.
- YTD return: Approx. 77%
- Low P/E ratio
- 2.66% dividend increases
- Diversified business
- Limited international exposure
5. Marathon Oil Corporation (MRO)
Marathon Oil Corporation is not to be confused with MPC. The pair once traded as one but eventually split in 2011. MRO is a separate business that is involved in oil exploration and production. The company focuses on low-cost, high-margin regions in the U.S. that are oil-rich. It has some exposure to oil internationally through Equatorial Guinea.
Taking a closer look at the financials, it’s clear Marathon Oil is a lot smaller than other oil stocks by market capitalization, sitting at just $19.86 billion. Marathon’s cash pile and dividend are on the low side at $682 million and 1.33%, respectively.
However, it makes up for this elsewhere. Marathon has bought back $1.6 billion worth of its own shares since October 2021 and increased its dividend for five quarters in a row. Both of these aspects inherently increase shareholder value.
- YTD return: Approx. 95%
- Dividend increases
- Share buybacks
- Limited international exposure
- Low dividend
6. Imperial Oil Limited (IMO)
Imperial Oil has been in business for more than a century. It supplies fuels for both retail and marine customers as well as creates chemical products and asphalt pavings.
It has had a mixed performance in quarterly earnings reports over the last year, but the stock has seen continued momentum nonetheless. It has one of the highest levels of insider ownership from these picks at 70%, trades at a P/E multiple of 13.99 and has a dividend of 2.23%.
- YTD return: Approx. 55%
- High insider ownership
- Diversified business
- Mediocre P/E ratio and dividend
7. Suncor Energy Inc. (SU)
Suncor is one of Canada’s largest companies focusing on developing one of the largest petroleum resource basins in the world. ESG investors should take note of the company’s excellent sustainability track record.
The company has recently bounced back after missing three out of four quarterly earnings estimates in the last 12 months. With a P/E ratio of 11.36, a 4.35% dividend and $2.6 billion sitting in cash, Suncor is another strong oil stock pick.
- YTD return: Approx. 67%
- Low P/E ratio
- Attractive dividend
- Investing in sustainability
- Missed analyst expectations several times last year
8. Liberty Energy Inc. (LBRT)
Liberty Energy is unique in the fact that it services the oil and gas exploration companies. It tackles the oil industry from the angle of developing new technologies to serve existing oil businesses.
While it has an innovative business model, it has missed several quarterly estimates in the last year and is currently unprofitable. However, Liberty Energy has the potential to perform better in the long term and could be a good choice for speculative investors.
- YTD return: Approx. 78%
- Innovative long-term business model
- Missed estimates
It’s a good idea to have some exposure to energy stocks in any portfolio. Oil stocks seem to be one of the most promising sectors to deliver returns into the back half of 2022.
Oil Stock FAQs
Here are some common questions investors ask about oil stocks.
- What is the best oil stock to buy right now?
- One of the best oil stocks to buy right now is Berkshire Hathaway-backed Occidental Petroleum, which trades under the ticker OXY.
- Is oil a good stock investment?
- Are oil stocks rising?
- Oil stocks have been rising in 2022. The United States Oil Fund is up more than 65% this year. Despite potential temporary dips, it will continue to rise in the long term.
- How are oil stocks doing today?
- To see the current price of oil stocks, visit this link, which tracks the performance of the USO.
Data is accurate as of June 22, 2022, and is subject to change.
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