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U.S. Politicians Bought These Oil & Gas Stocks. Should You?

Story Highlights

Tracking the trading activities of U.S. politicians could be a wise idea for investors. This article talks about three oil and gas stocks that were most purchased by Democrats and Republicans in the past six months.

Investors will be intrigued to know that many U.S. politicians have deep knowledge of and broad exposure to the country’s stock market. In the past six months, many politicians have invested in the oil and gas industry, with the top three stocks being Baker Hughes Company (NASDAQ: BKR), Magellan Midstream Partners, L.P. (NYSE: MMP), and Pioneer Natural Resources Company (NYSE: PXD).

It is worth mentioning that the oil and gas industry has been one of the most profitable industries so far in 2022. While the broader market suffered from domestic and international uncertainties, the U.S. oil and gas companies benefited from higher oil and gas prices, heavy demand, and restricted supply, which was also, to some extent, triggered by the Ukraine-Russia war.

With government and industry initiatives, the production levels have strengthened lately, resulting in price corrections for oil and natural gas. Despite this, the WTI crude oil price is up 19% since the beginning of 2022, while the natural gas prices reflect a year-to-date gain of 109.7%.

The strength in the prices of oil and natural gas, as well as heavy demand and soft supply, could keep the momentum high for the U.S. oil and gas companies. Using TipRanks’ Stock Comparison tool, we have prepared a consolidated chart of Baker Hughes, Magellan Midstream, and Pioneer Natural Resources, which is given below:

Baker Hughes Company (NASDAQ: BKR)

The $25.9-billion company provides technologies and services to oil and gas, and industrial end markets. In the past six months, Republican Diana Lynn Harshbarger conducted nine Buy trades on BKR stocks, each valuing $1,000 to $15,000. The number of shares bought by the Representative from Tennessee in each trade varied within the 27 to 488 range.         

On TipRanks, analysts are unanimously optimistic about the prospects of BKR, which commands a Strong Buy consensus rating based on 12 Buys and one Hold. BKR’s price target of $34.77 reflects 37.81% upside potential from the current level. The company has the potential to benefit from the demand for liquefied natural gas, investments in energy transition and upstream operations, and actions supporting industrial businesses in the long term.

However, supply-chain challenges, fears of inflation, and high-interest rates are near-term concerns. Its shares have decreased 5.1% in the past six months. Also, the hedge funds have sold 32.5 million shares of BKR in the past three months.

Magellan Midstream Partners, L.P. (NYSE: MMP)

Shares of this $11-billion company, which is a specialist in the storage and transportation of petroleum products, have been purchased by two Republican politicians in the past six months. Virginia Ann Foxx, a Representative from North Carolina, purchased 21 to 304 shares of MMP for $1,000 to $15,000 in June and conducted five other Buy transactions in the stock.

Meanwhile, Congressman Kevin Ray Hern increased his holding in MMP stock by 21 to 309 shares in May. The transaction was valued within the $1,000 to $15,000 range. The Representative from Oklahoma also bought MMP shares in February.

Demand for refined products, economic conditions, and cost inflation would likely influence Magellan Midstream’s performances in the quarters ahead. On TipRanks, the company has a Moderate Buy consensus rating based on four Buys and three Holds. MMP’s average price forecast of $55.86 reflects 7.26% upside potential. Shares of MMP have increased 8% in the past six months.

It is worth mentioning that the hedge funds have increased their exposure to MMP stock by 70.7 thousand shares in the last three months. They seem to have complete faith in the company’s prospects.

Pioneer Natural Resources Company (NYSE: PXD)

The $55.1-billion oil and natural gas exploration and production company is in the portfolio of House Representative Kevin Ray Hern. In June, the Republican from North Carolina purchased 57 to 190 shares of PXD for $15,000 to $50,000. He has conducted four other Buy transactions in the past six months.

In addition, Democrat Lois Jane Frankel bought five to 65 shares of PXD in a transaction worth $1,000 to $15,000 in April. Also, the Representative from Florida purchased PXD shares in March 2022.

Solid production capabilities, zeal to reward shareholders, and technological expertise are forecast to be advantageous for Pioneer Natural Resources in the quarters ahead. Interestingly, the hedge funds have increased their holdings in PXD by 427.7 thousand shares in the last three quarters.

However, cost inflation is concerning. On TipRanks, analysts are cautiously optimistic about the prospects of PXD and have a Moderate Buy consensus rating on the stock, which is based on 12 Buys, six Holds, and one Sell. PXD’s price target of $292 mirrors 32.32% upside potential from current levels. In the past six months, shares of PXD have declined 3.2%.

Concluding Remarks

The fundamentals and prospects of the oil and gas industry are solid in the United States. A year-to-date increase of 33.7% in the Dow Jones U.S. Oil & Gas index versus a 10.3% decline in the Dow Jones and a 12.8% fall in the S&P 500 index supports the growth story. Also, the U.S. Energy Information Administration (EIA) forecasts a 44.8% year-over-year growth in the WTI crude oil price (average) in 2022. Further, EIA anticipates the average natural gas price to expand 12.5% in the year.

The U.S. politicians increasing their exposure to Baker Hughes, Magellan Midstream, and Pioneer Natural Resources stocks reflect their foresightedness and belief in the growth prospects of these U.S. companies. Investors with a proper analysis of their own could choose to follow the trail. 

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