This year, the record-high inflation drove wild swings in the stock market, forcing the Fed to hike interest rates persistently. However, despite the ongoing macroeconomic and geopolitical issues, the economy seems to be buoyant.

In the third quarter of 2022, the economy recorded its first GDP expansion for the year. GDP rose at an annualized pace of 2.6%, beating the 2.3% estimate. Moreover, according to Morgan Stanley’s Michael Wilson, U.S. midterm elections could fuel a year-end rally.

On the other hand, the oil and gas market remained tight. According to Goldman Sachs’ head of commodities research, crude oil prices could rise to $115 per barrel by April 2023 due to various factors squeezing supply. The U.S.’s halt in releases from its Strategic Petroleum Reserve, the upcoming European Union ban on Russian crude, and the disrupted supply of U.S. shale production are expected to drive crude prices higher in the near term.

Given the backdrop, it could be wise to buy oil & gas stocks, TotalEnergies SE (TTE) and Energy Transfer LP (ET), which have gained significant momentum and could soar higher.

TotalEnergies SE (TTE)

Headquartered in Courbevoie, France, TTE operates as an integrated oil and gas company worldwide. It operates through four segments Integrated Gas, Renewables & Power; Exploration & Production; Refining & Chemicals; and Marketing & Services. 

On October 31, TTE announced an oil discovery by the Pedunculo well, which is drilled at a water depth of approximately 2,200 meters and has one of the highest recorded oil column thicknesses in Brazil. This resource should significantly enhance the company’s production capability.

On October 26, TTE announced the creation of a joint venture with Casa dos Ventos (CDV), a Brazil-based renewable energy developer, to jointly develop, build, and operate the renewable portfolio of CDV. This development is expected to be strategically beneficial for the company.

For the fiscal third quarter of 2022, TTE’s adjusted EBITDA increased 73.7% year-over-year to $19.42 billion. The company’s revenues from sales increased 32.4% year-over-year to $64.96 billion. Moreover, its adjusted earnings per share increased 117.6% year-over-year to $3.83.

TTE’s revenue is expected to increase 9.2% year-over-year to $60.37 billion for the fiscal fourth quarter ending December 2022. Its EPS is expected to rise 31.9% year-over-year to $3.36 in the same period.

The stock has gained 13.8% year-to-date and 11.5% over the past six months to close its last trading session at $56.30. TTE’s stock is trading higher than its 50-day and 200-day moving averages of $51 and $52.40, respectively.

TTE’s POWR Ratings reflect this promising outlook. The company has an overall rating of B, which translates to a Buy in our proprietary rating system. The POWR Ratings assess stocks by 118 different factors, each with its own weighting.

TTE is also rated an A in Momentum and a B in Quality. Within the B-rated 94-stock Energy – Oil & Gas industry, TTE is ranked #17.

To see additional POWR Ratings for Sentiment, Value, Growth, and Stability for TTE, click here.

Energy Transfer LP (ET)

ET provides energy-related services. The company owns and operates approximately 11,600 miles of natural gas transportation pipeline, two natural gas storage facilities in Texas and Oklahoma, and 19,830 miles of interstate natural gas pipeline. It sells natural gas to electric utilities, independent power plants, local distribution, and industrial end-users.

On October 26, ET announced a quarterly cash distribution of $0.265 per share for the third quarter of 2022, to be paid on November 21, 2022. This represents a 70% increase from the prior-year quarter and a 15% increase sequentially.

ET’s revenue increased 37.7% year-over-year to $22.94 billion for the fiscal 2022 third quarter ended September 30, 2022. Its operating income grew 37.3% year-over-year to $1.97 billion, while its adjusted EBITDA amounted to $3.09 billion, up 19.7% from the prior-year period. Moreover, the company’s net income attributable to partners increased 58.4% year-over-year to $1.01 billion.

Analysts expect ET’s revenue for the fiscal fourth quarter ending December 31, 2022, to come in at $24.95 billion, representing an increase of 33.7% year-over-year. The consensus EPS estimate of $0.38 for the same quarter indicates a 31.4% year-over-year increase. The company also beat the consensus revenue and EPS estimates in three of the trailing four quarters.

Shares of ET have gained 45.4% year-to-date and 27.9% over the past year to close the last trading session at $11.97. The stock is trading above its 50-day and 200-day moving averages of $11.76 and $11.04.

According to our POWR Ratings, ET has an A grade for Momentum and a B for Value. It is ranked #50 in the same industry. 

Click here to see the additional POWR Ratings for ET for Quality, Growth, Stability, and Sentiment.

TTE shares were trading at $57.44 per share on Thursday morning, up $1.14 (+2.02%). Year-to-date, TTE has gained 19.62%, versus a -16.82% rise in the benchmark S&P 500 index during the same period.

About the Author: Komal Bhattar

Komal's passion for the stock market and financial analysis led her to pursue investment research as a career. Her fundamental approach to analyzing stocks helps investors identify the best investment opportunities. More...

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