Rising oil and gas prices due to strong demand and supply cuts over the past couple of years have made the energy sector – the best-performing sector over the past month. Investors’ interest in energy stocks is evident from the Energy Select Sector SPDR Fund’s (XLE) 12.9% gain over the past month versus the SPDR S&P 500 Trust ETF’s (SPY) 3.9% loss.
According to a CNBC report, natural gas prices are rising, and this year, the commodity could be the most expensive in 13 years due to a demand-supply imbalance. The international crude oil benchmark Brent rose above $80 a barrel last week, hitting a 3-year high. Goldman Sachs (GS) calls for Brent crude to hit $90 a barrel by the end of the year.
So, it could be wise to scoop up the shares of fundamentally strong energy stocks Royal Dutch Shell plc (RDS.A), TotalEnergies SE (TTE), and BP p.l.c. (BP). They are currently trading above their respective 50-day and 200-day moving averages. In addition, they have a Buy rating in our proprietary POWR Ratings system.
Royal Dutch Shell plc (RDS.A)
Based in The Hague, Netherlands, RDS.A operates as an energy and petrochemical company worldwide. The company operates through Integrated Gas, Upstream, Oil Products, Chemicals segments. It explores and extracts crude oil, natural gas, and natural gas liquids; markets and transports oil and gas; and produces gas-to-liquids fuels and other products.
On July 26, 2021, RDS.A announced its investment in the Whale Development in the Gulf of Mexico. Wael Sawan, Shell Upstream Director, said, “We are building on more than 40 years of deep-water expertise to deliver competitive projects that yield high-margin barrels so that we can meet the energy demands of today while generating the cash required to help fund the development of the energy of the future.”
For the fiscal second quarter ended June 30, 2021, RDS.A’s revenue increased 86.2% year-over-year to $60.52 billion. In addition, the company’s total revenue increased 90.1% year-over-year to $61.76 billion. Its net income came in at $3.43 billion compared to a loss of $18.13 billion in the year-ago period. Also, its EPS came in at $0.44 compared to a loss per share of $2.33 in the prior year’s quarter.
RDS.A’s revenue is expected to come in at $284.76 billion in fiscal 2021, representing a 57.7% year-over-year rise. The company’s EPS is expected to increase 306.5% year-over-year to $5.04 in the current year. In addition, it surpassed Street EPS estimates in each of the trailing four quarters.
The stock has soared 14.6% over the past month and 9.5% over the past three months to close Friday’s trading session at $45.39. The stock is currently trading above its 50-day and 200-day moving averages of $40.72 and $40.13, respectively, indicating an uptrend.
It’s no surprise that RDS.A has an overall B rating, which equates to a Buy in our POWR Ratings system. The POWR Ratings assess stocks by 118 different factors, each with its ,weighting.
In addition, it has an A grade for Momentum, and a B grade for Growth. RDS.A is ranked #21 out of 50 stocks in the A-rated Foreign Oil & Gas industry. Click here to see the additional POWR Ratings for RDS.A (Value, Quality, Sentiment, and Stability).
TotalEnergies SE (TTE)
Headquartered in Paris, France, TTE operates as an integrated oil and gas company with roughly 12,328 Mboe of combined proved oil and gas reserves. The company operates through four segments: Exploration & Production; Integrated Gas, Renewables & Power; Refining & Chemicals; and Marketing & Services.
On September 28, 2021, TTE collaborated with China Three Gorges Corporation to develop more than 11,000 High Power Charge Points for Electric Vehicles in Wuhan and Hubei Province. Alexis Vovk, President of Marketing & Services at TTE, said, “This partnership with CTG opens new doors to TotalEnergies for a long term and widened cooperation with a leader of China’s electric energy.”
TTE’s sales increased 82.9% year-over-year to $47.05 billion for the fiscal second quarter ended June 30, 2021. The company’s consolidated net income came in at $2.3 billion, compared to a loss of $8.42 billion in the prior year’s quarter. Also, its EPS came in at $0.80, compared to a loss of $3.27 in the year-ago period.
Analysts expect TTE’s revenue to be $176.64 billion in fiscal 2021, representing a 25.6% year-over-year rise. In addition, the company’s EPS is expected to increase 267.1% year-over-year to $5.25 in the next year. Also, it surpassed Street EPS estimates in three of the trailing four quarters.
The stock has soared 9.1% over the past month and 4.8% over the past three months, to close Friday’s trading session at $48.05. The stock is currently trading above its 50-day and 200-day moving averages of $44.92 and $45.66, respectively, indicating an uptrend.
TTE’s strong fundamentals are reflected in its POWR Ratings. The stock has an overall B rating, which indicates a Buy in our proprietary rating system.
In addition, TTE has an A grade for Growth and Momentum, and a B grade for Stability. Within the Energy – Oil & Gas industry, it is ranked #12 of 91 stocks. Also, click here to see TTE’s POWR Ratings for Value, Quality, and Sentiment.
BP p.l.c. (BP)
BP engages in the energy business worldwide and is based in London. It operates through the Gas & Low Carbon Energy; Oil Production & Operations; Customers & Products; and Rosneft segments.
On September 15, 2021, BP and NYK Line joined forces to help decarbonize hard-to-abate sectors. William Lin, EVP regions, cities and solutions, BP said, “BP and NYK Line have a combined experience of almost 250 years working in the shipping sector, strong existing relationships, and a shared understanding of the need for the marine industry to decarbonize.”
BP’s total revenues increased 81% year-over-year to $37.6 billion for the second quarter ended June 30, 2021. Its profit for the period came in at $3.35 billion compared to a loss of $17.52 billion in the previous period. Also, its EPS came in at $0.92 compared to a loss per share of $5 in the year-ago period.
Analysts expect BP’s revenue and EPS to grow at 1.8% and 6.5% year-over-year to 166.66 billion and $3.43 respectively, in fiscal 2022. Also, it surpassed Street EPS estimates in three of the trailing four quarters.
The stock has soared 13.5% over the past month and 12.3% over the past six months, to close Friday’s trading session at $27.60. The stock is currently trading above its 50-day and 200-day moving averages of $25.08 and $25.58, respectively, indicating an uptrend.
It’s no surprise that BP has an overall B rating, which equates to a Buy in our POWR Rating system. In addition, BP has an A grade for Momentum, and a B grade for Growth.
BP is ranked #23 in the Foreign Oil & Gas industry. Click here to see the additional POWR Ratings for BP (Value, Quality, Sentiment, and Stability).
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RDS.A shares were trading at $45.76 per share on Monday afternoon, up $0.37 (+0.82%). Year-to-date, RDS.A has gained 33.83%, versus a 15.56% rise in the benchmark S&P 500 index during the same period.
About the Author: Riddhima Chakraborty
Riddhima is a financial journalist with a passion for analyzing financial instruments. With a master's degree in economics, she helps investors make informed investment decisions through her insightful commentaries. More...
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