The G7 nations have imposed a price cap on Russian oil exports to curb the country’s revenue from its energy exports that fund its war on Ukraine. Moreover, the European Union’s embargo on Russian oil is expected to come into effect in December. U.S. Treasury Secretary Janet Yellen has warned that this could spike energy prices in winter.
Oil prices could be due for a rebound soon. The Biden administration is considering a plan to refill the Strategic Petroleum Reserve if oil falls to around $80 per barrel to protect crude prices from dropping further.
Moreover, OPEC expects oil demand to increase by 3.10 million barrels per day (bpd) in 2022 and by 2.70 million bpd in 2023 on the backs of rebounding oil use and the strong economic performance of major oil-consuming countries.
Given this backdrop, we believe these fundamentally strong energy stocks Cenovus Energy Inc. (CVE), Birchcliff Energy Ltd. (BIREF), Amplify Energy Corp. (AMPY), and MV Oil Trust (MVO), might be solid additions to one’s portfolio. These stocks are trading under $20.
Cenovus Energy Inc. (CVE)
Headquartered in Calgary, Canada, CVE develops, produces, and markets crude oil, NGLs, and natural gas. The company operates through the Oil Sands; Conventional; Offshore; Canadian Manufacturing; U.S. Manufacturing; and Retail segments.
On August 8, CVE announced that it had agreed to acquire BP p.l.c.’s (BP) 50% interest in the bp-Husky Toledo Refinery in Ohio. The full ownership of the refinery is expected to further integrate CVE’s heavy oil production and refining capabilities.
On June 13, it announced that it had agreed to purchase the remaining 50% of the Sunrise oil sands project in northern Alberta from BP. This is expected to bolster the company’s strength in oil sands.
CVE’s revenues increased 80.2% year-over-year to CAD19.17 billion ($14.68 billion) in the fiscal second quarter that ended June 30. Net earnings and net earnings per common share stood at CAD2.43 billion ($1.86 billion) and CAD1.19, up 985.7% and 981.8% from the prior-year period.
Street EPS estimate for the quarter ending September 2022 of $1.09 indicates a 419% year-over-year rise. Likewise, Street revenue estimate for the same period of $13.16 billion reflects an increase of 31.2% from the prior-year period.
The stock has gained 109.4% over the past year and 50.4% year-to-date to close its last trading session at $18.47.
CVE’s strong fundamentals are reflected in its POWR Ratings. The stock has an overall rating of B, which equates to a Buy in our proprietary rating system. The POWR Ratings are calculated by considering 118 different factors, with each factor weighted to an optimal degree.
CVE has an A grade for Momentum and a B grade for Growth and Value. In the 95-stock Energy – Oil & Gas industry, it is ranked #24. The industry is rated B.
Click here to see the additional POWR Ratings for CVE (Stability, Sentiment, and Quality).
Birchcliff Energy Ltd. (BIREF)
BIREF, headquartered in Calgary, Canada, is an intermediate oil and gas company. It develops and produces natural gas, light oil, condensate, and NGLs in Western Canada. The company’s asset portfolio contains various properties.
On August 30, BIREF declared a quarterly dividend of CAD0.02 per common share, payable to shareholders on October 3. This reflects the shareholder return ability of the company. The company also announced the redemption of all of its issued and outstanding cumulative redeemable preferred shares, Series A, and cumulative redeemable preferred shares, Series C, on September 30.
For the fiscal second quarter that ended June 30, BIREF’s revenue increased 118.6% year-over-year to CAD409.37 million ($313.57 million). Net income and comprehensive income rose 378.6% from the prior-year quarter to CAD214.90 million ($164.61 million). Net income per common share improved 381.3% from the same period the prior year to CAD0.77.
Street revenue estimate for the fiscal third quarter (ending September 2022) of $324.52 million indicates a 54% year-over-year rise.
Over the past year, the stock has gained 76.2% to close the last trading session at $8.60. It has gained 68.6% year-to-date.
It’s no surprise that BIREF has an overall B rating, which translates to Buy in our POWR Ratings system. The stock has an A grade for Momentum and a B for Growth and Quality. It is ranked #9 in the Energy – Oil & Gas industry.
To see the additional POWR Ratings for Value, Stability, and Sentiment for BIREF, click here.
Amplify Energy Corp. (AMPY)
AMPY engages in the acquisition, development, and production of oil and natural gas properties in the United States. The company’s properties include working interests in producing and undeveloped leasehold acreage and identified producing wells.
On September 8, AMPY announced that it had reached an agreement with the State of California to resolve all criminal matters involving the company and its subsidiaries from the October 2021 Southern California Pipeline Incident.
AMPY’s total revenues increased 51.5% year-over-year to $121.78 million in the fiscal second quarter that ended June 30. Net income and earnings per share came in at $29.22 million and $0.73, up substantially from their negative year-ago values.
The stock has gained 93.8% over the past year and 141.8% year-to-date to close its last trading session at $7.52.
This promising prospect is reflected in AMPY’s POWR Ratings. The stock has an overall B rating, equating to a Buy in our proprietary rating system. It has a Momentum grade of A and a Value and Quality grade of B. It is ranked #20 in the Energy – Oil & Gas industry.
Click here to see the additional POWR Ratings for Growth, Stability, and Sentiment for AMPY.
MV Oil Trust (MVO)
MVO holds and acquires net profits interests in MV Partners, LLC’s oil and natural gas properties. The trust’s properties include oil and gas wells located in the Mid-Continent region in the states of Kansas and Colorado.
For the quarter that ended June 30, MVO’s distributable income increased 102.4% year-over-year to $4.89 million. This can be attributed to a rise of 99.9% from the prior-year period in income from net profits interest to $5.24 million. Distributions per trust unit came in at $0.425, up 102.4% from the same period the prior year.
MVO’s shares have gained 82.1% over the past year and 48.9% year-to-date to close its last trading session at $13.15.
MVO’s overall B rating translates to a Buy in our POWR Ratings system. The stock has a Growth, Momentum, and Quality grade of B. It is ranked #26 in the same industry.
In addition to the POWR Rating grades we’ve stated above, one can see MVO ratings for Value, Stability, and Sentiment here.
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CVE shares were trading at $19.46 per share on Wednesday morning, up $0.99 (+5.36%). Year-to-date, CVE has gained 59.33%, versus a -16.03% rise in the benchmark S&P 500 index during the same period.
About the Author: Anushka Dutta
Anushka is an analyst whose interest in understanding the impact of broader economic changes on financial markets motivated her to pursue a career in investment research. More...
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