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These Top Smart Score Energy Stocks Could Outperform the Market
Stock Analysis & Ideas

These Top Smart Score Energy Stocks Could Outperform the Market

Currently, Wall Street is witnessing extreme volatility. Rising inflation and the Federal Reserve’s tightening monetary policies worry investors. Furthermore, supply chain problems and the COVID-19 rise in China remain other major concerns.

Furthermore, with the first-quarter earnings season well underway, few companies have moved dramatically higher or lower as a result of surprise reports, analyst ratings, management comments, and further growth and risk considerations.

At this juncture, analyzing a company’s fundamentals and examining its financials to determine which stock an investor should buy becomes very tedious.

In such a scenario, TipRanks’ Smart Score System allows an investor to conduct more in-depth research of a company and make better selections. This method uses eight essential indications to evaluate the stock on a scale of 1 to 10, with 10 being the best.

Using TipRanks’ Top Smart Score Stocks, we’ve selected two ‘Perfect 10’ stocks from the Energy sector that make a compelling case for market traders.

ConocoPhillips (COP)

ConocoPhillips, a major oil and gas company, has received a “Perfect 10” over the last two days. The corporation explores, produces, and transports crude oil and natural gas in 13 countries.

The company’s stock price has risen due to the huge recovery in oil prices and strong demand for it. The stock has increased about 82% over the last year and 37% in the last six months.

In terms of financials, the company recently released impressive Q1-2022 results. In Q1, the company produced 1.747 million barrels of oil equivalent per day (MBOED), up 220 MBOED from the year-ago quarter.

Earnings were $3.27 per share, up from $0.69 per share in the year-ago quarter. Higher realized prices and volumes drove earnings growth.

Following better-than-expected results, ConocoPhillips now plans to return up to $10 billion to its shareholders. Further, COP also issued a $0.46 per share regular quarterly common dividend and a $0.70 per share third-quarter variable return of cash (VROC) payment. The current dividend yield for COP is 3%.

Susquehanna analyst Biju Perincheril has a Buy rating on the COP stock and increased the price target to $129 from $108, which implies 28% upside potential from current levels.

Apart from Perincheril, the majority of experts are optimistic about ConocoPhillips. On TipRanks, the stock commands a Strong Buy consensus rating based on 12 Buys and two Holds. The average ConocoPhillips price target is $128.69, representing 27.8% upside potential.

Also, the stock has generated a lot of excitement among investors. Investors holding portfolios on TipRanks maintain a very positive outlook on COP stock. According to the statistics, 6.2% of these investors boosted their COP stock holdings in the last 30 days.

Targa Resources (TRGP)

Targa Resources is next, an energy midstream business that currently has a 9 out of 10 Smart Score Rating rating.

The company operates in the natural gas industry. It has a diverse network of assets, primarily in the Texas-Oklahoma region. With a market capitalization of $16.2 billion, the stock price has increased 84% in the past year and 29% in the last six months.

The firm announced its financial results for the first quarter of 2022 on May 5. Its quarterly sales increased 37% year-over-year to almost $5 billion. However, net income was $88 million, compared to $146.4 million in the year-ago quarter.

The company also reported strong cash flows. TRGP’s distributable cash flow and adjusted free cash flow for the first quarter came in at $494.6 million and $373.2 million, respectively. Further, the company declared a regular quarterly common dividend of $0.35 per share or $1.40 per share on an annualized basis.

Last month, TRGP completed the acquisition of Southcross Energy Operating LLC and its subsidiaries in South Texas. The deal is expected to strengthen Targa’s natural gas gathering and processing footprint.

Analysts are upbeat about this stock, with 13 unanimous Buy ratings. The average Targa Resources price target of $89.69 implies around 26.4% upside from current levels.

The Bottom Line

Given the current market situation, oil companies appear to be on track to make a profit, create significant revenues, and see their stock prices rise in 2022. Furthermore, given double-digit potential and strong fundamentals, both ConocoPhillips and Targa Resources appear to be safe bets.

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