In the world of investment, timing is everything. Currently, the spotlight shines on oil stocks. As oil prices steadily ascend, investors are presented with a golden opportunity. The enticing prospects are dictated by surging crude oil prices as well as by a compelling technical phenomenon known as the Golden Cross. In this article, we highlight five promising oil stocks to buy that stand poised to exceed revenue and earnings expectations.
Rising Tides of Oil Prices:
As of September 1st, the (USO:NYE) witnessed a remarkable surge. It pushed oil prices up by more than 7%, culminating in a new one-year high. This substantial uptick broke free from the confines of a trading range, setting the stage for further gains.
The oil industry’s outlook appears promising, with projections indicating an upward trend in prices through the year’s end, potentially reaching the $95 to $100 range. The technical indicators echo this optimism, marking a solid trajectory for revenue and earnings in the oil sector.
Deciphering the Golden Cross:
The coup de grâce is the formation of a Golden Cross, a powerful signal that can influence the market for the next 12 to 24 months. The formation emerged while breaking through critical resistance levels, reinforcing the bullish sentiment. Hence, potentially ushering in a year of windfall profits for energy companies.
The term “Golden Cross” carries substantial weight in the world of technical analysis. It signifies the moment when the short-term Exponential Moving Average (EMA) crosses over the long-term EMA from below. This alignment indicates harmony between short-term traders and long-term investors.
Energy Sector Echoes the Optimism:
The oil stock market resonates with the positive signals in the oil sector. The S&P 500 Energy Select Sector tracking stock, (XLE:NYE), also flaunts a Golden Cross. This further suggests that the ETF may ascend to the upper echelons of its trading range. This upward trajectory could yield gains of approximately 5%, with the potential for even greater rewards if the oil market continues to follow through on its bullish signals.
1. Exxon Mobil Corp:
Exxon Mobil, trading as (XOM:NYE), proudly stands as the world’s largest independently operated energy company outside of OPEC and China. With its significant contribution of over 21% to the XLE ETF and a generous yield of approximately 3.2%, compared to the fund’s 3.5%, Exxon Mobil presents a compelling value proposition. Trading at a mere 12X earnings relative to the S&P 500, it exhibits attractive valuation metrics.
XOM Stock: Financial Analysis
Remarkably, analysts have been adjusting their targets for Q3 and Q4 downwards, even as oil prices have experienced an uptick. This downward revision suggests that expectations are currently modest, setting the stage for potential outperformance.
Looking ahead to 2024, consensus figures paint an even more promising picture. The expectations of year-over-year declines in revenue and earnings continue to improve. Assuming the trajectory of rising oil prices persists, Exxon Mobil may experience a return to growth, possibly as early as Q4 of this year.
XOM Stock Forecast: Analyst Insights
The current price of (XOM:NYE) is USD 114.51. The average analyst target price on the stock is USD 126.04, indicating an upside potential of 10.07%. Exxon has a high market CAP of USD 452.55 Billion. Moreover, XOM stock is high in volatility and is viewed as neutral among analysts. The joint analysts’ consensus rates the stock as a “Buy”. This marks it among good oil stocks to buy.
2. Chevron Corporation:
Chevron Corporation is another heavyweight in the integrated oil sector, poised to outperform the market. (CVX:NYE) is a dominant energy player. Representing about 18% of the XLE ETF and offering a yield of 3.7%, Chevron’s shares carry a slightly higher 13.5X P/E multiple compared to Exxon Mobil. Nonetheless, this valuation remains appealing, especially when juxtaposed with the average S&P 500 company.
CVS Stock: Growth Trajectory
Chevron’s payout is not only reliably secure but is also accompanied by the promise of top and bottom-line growth in the coming year. Recent increases in dividends are worth high-single-digits, further sweetened by share repurchases. Hence, adding to the attractiveness of this energy giant and making it one of the best oil stocks to buy.
CVX Stock Forecast: Analyst Insights
As per CVX stock forecast from 13 analysts, the average analyst price target is USD 194.13. This implies an upside potential of 16.50% from the current price of USD 166.63. Furthermore, (CVX:NYE) has a high market CAP of USD 317.54 Billion. CVX stock is overpriced compared to its peers. Analysts view the stock as neutral and rate it as “Buy”.
3. Schlumberger NV:
Schlumberger (SLB:NYE), leads the charge in the oil industry, riding high on an oil-field super-cycle. While its stock commands a higher valuation and yields modestly at 1.65% with a P/E ratio of 20X, the allure of aggressive dividend growth is hard to ignore.
The company is on track to normalize its payout to pre-pandemic levels, having already increased it twice. The expectation is that Schlumberger will continue raising the distribution at a double-digit pace.
SLB Stock Forecast: Analyst Views
The average analyst target price of (SLB:NYE) is USD 65.44 whereas the current price is USD 61.00. This signifies an upside potential of 7.29%. Schlumberger has a high market CAP of USD 85.57 Billion. Like CVX stock, this stock is overpriced compared to its peers as well. The analysts view (SLB:NYE) as slightly bearish and rate it as a “Strong Buy”. This rating puts the SLB stock in the top five oil stocks to buy.
4. Occidental Petroleum Corporation:
Investing in Occidental Petroleum (OXY:NYE) presents an intriguing opportunity. Occidental Petroleum is also poised for aggressive dividend growth and improvement in its balance sheet. Additionaly, the company’s plan to repurchase preferred shares in 2023 is among the catalysts that attracted Mr. Buffett and Berkshire Hathaway.
Notably, OXY shares have been on an upward trajectory following Berkshire’s purchases, and they demonstrate substantial support above a Golden Cross.
OXY Stock Forecast: Analyst Projections
The current price of (OXY:NYE) is USD 65.57. OXY stock forecast gave an average analyst price target of USD 70.54 with an upside potential of 7.58%. The company has a high market CAP of USD 59.02 Billion. The analysts’ consensus views the stock as bearish and rates it as a “Buy”. Hence, making the stock one of the best oil stocks to buy.
5. Phillips 66: Midstream Potential
Lastly, Phillips 66 (PSX:NYE) operates an extensive network of refineries, midstream, and downstream assets. It has generated a robust cash flow. The company’s dividend, worth 3.6%, and shares trading near multi-year highs, make for an enticing prospect.
While results may vary over the next few quarters and into the next year, earnings are expected to be sufficient to sustain dividend increases and share repurchases.
PSX Stock Forecast: Analyst Insights
The average analyst price target for PSX stock is USD 124.43. This implies an upside potential of 6.68% from the current price of USD 116.64. Phillips 66 has a market CAP of USD 52.17 Billion. The analysts view (PSX:NYE) as slightly bearish and rate it as a “Strong Buy”.
In conclusion, these companies are well-positioned to exceed revenue and earnings expectations. The golden opportunity to invest in oil stocks has arrived. It is a window of promise that investors should not let slip by. Seize the golden opportunity and look into these high potential oil stocks to buy.