For the oil industry, things have changed. There’s no denying that 2022 is shaping up to be quite the year for oil firms. The increase in oil prices has been accelerated by the surge in oil demand due to the ongoing economic reopening and demand for mobility. Furthermore, the heavy sanctions levied on Russia’s energy sector have cut the global supply by 11%, causing oil prices to spike sharply.
Keeping up with the rising trend, both the WTI and Brent crude indexes continue to climb at the time of writing: $107 and $111 per barrel — both representing gains of over 2%.
Since we know that oil-related stocks have a high correlation with crude oil spot prices, this divergence of supply and demand is excellent news for oil firms. Despite the consequent impacts reverberating across other industries, it does not appear that the divergence will equalize any time soon. Investors should consider adding these equities to their portfolios if they haven’t already.
Given the current volatile market environment, the question that arises is how to select the healthiest oil stocks. For this, the TipRanks Smart Score System is here to assist you.
What precisely is this Smart Score tool? This approach is a data-driven score that helps an investor undertake a more in-depth analysis of a firm based on eight key market criteria before awarding a score to the stocks on a scale of 1-10. Notably, stocks with a Smart Score of 10 offer the maximum protection, especially when the stock market is beset by unprecedented levels of risk, as it is right now.
Given the foregoing context, we’ve chosen three oil stocks that have received a “Perfect 10” stock analysis using TipRanks’ Smart Score System. Furthermore, experts have given these stocks a consensus Strong Buy rating.
Enerplus Corp., an oil exploration and production company has received a “Perfect 10” rating over the past two days. The company has operations in the upper Appalachian Marcellus shale, Williston basin in the upper midwest states, and in multiple oil properties across Western Canada.
Regarding its 2021 finances, the company generated $410.1 million in free cash flow. Given the company’s excellent liquidity position, ERF is well-positioned to profit from the increasing commodity prices.
On a more positive note, Enerplus has consistently paid its monthly dividend. The company hiked its dividend by 37% and bought back $123.2 million in stock in 2021, strengthening investor confidence.
Analysts are upbeat about this stock, with seven Buys ratings and one Hold rating. The shares are priced at $12.36 and the average Enerplus price target of $15.54 implies around 25.73% upside from that level.
Talos Energy (TALO)
Talos Energy Inc., an offshore oil and gas business, comes next on the list, with a “Perfect 10” rating being achieved over the last four days. The company focuses on oil and natural gas exploration and production throughout the Gulf of Mexico.
The company just released its fourth-quarter earnings, which included some impressive figures. With revenues of $382.9 million, growing 121.9% year-over-year, the results were outstanding. In the meantime, adjusted earnings per share were $0.45 versus a net loss of $0.04 per share in the year-ago quarter.
Further, the stock has generated a lot of excitement among investors. The investors holding portfolios on TipRanks maintain a very positive outlook on TALO stock. According to the statistics, 3.7% of these investors boosted their TALO stock holdings in the last 30 days.
Overall, with four analyst reviews on file, including three Buys and a single Hold, Talos gets a Strong Buy rating from the analyst consensus. Shares are priced at $15.13, and their $19.38 average target gives ~28% upside on the one-year horizon.
TotalEnergies SE (TTE)
TotalEnergies is an integrated oil and gas company that has received a “Perfect 10” rating. Exploration & Production, Integrated Gas, Renewables & Power, and Downstream are the four primary segments of the company’s operations.
The corporation has recently benefited from sky-high oil and gas prices, as well as favorable electricity pricing over the fourth quarter. For 2022, the firm plans to increase interim dividends by 5% due to robust cash flow generation. TotalEnergies also plans to repurchase up to $2 billion in shares in the first half of 2022.
Further, the majority of experts are optimistic about this firm. On TipRanks, TotalEnergies stock commands a Strong Buy consensus rating based on 4 unanimous Buys. The average TTE price target is $74.42, representing almost a 50% upside potential.
Also, the investors holding portfolios on TipRanks maintain a very positive outlook on TTE stock. According to the statistics, 18.9% of these investors boosted their TTE stock holdings in the last 30 days.
Oil prices appear to be continuing to rise, owing to high demand and other macroeconomic variables. As a result, oil corporations seem to be on course to make strong profits in 2022, generate significant revenue, and see their stock values climb.
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