10 Top-Rated Energy Stocks for the Rest of 2021
Oil prices are sizzling as the economy reopens. Here's a list of energy stocks that analysts love – and could be worth watching for the remainder of the year.
Among the market's major sectors, energy stocks are often the most volatile.
After all, other businesses such as retailers or automakers or tech companies have a measure of control over how much they can choose to sell their goods for. Unfortunately, energy stocks typically are at the mercy of market conditions because they deal in commodities like crude oil and natural gas that have very visible and fixed pricing.
That was a decidedly unfortunate dynamic for energy stock investors in 2020, as the COVID-19 pandemic sapped demand and prices for oil and gas plummeted as a result.
However, it's turning out to be quite a boon in 2021 as the global economy gets back on track. These fossil fuels are increasingly in demand at a time when many producers have curtailed operations and constrained supply over the last 12 months, which is creating tailwinds for many oil and gas firms.
As we look to the remainder of 2021, here are 10 energy stocks that are among the top-rated on Wall Street. Like with any investment, none of these are a guarantee to keep rising, especially if underlying commodity prices retreat. Still, investors can improve their chances by heeding the "smart money" and taking note of which energy stocks the pros believe will lead the sector's continued recovery.
Data is as of June 21. Dividend yields are calculated by annualizing the most recent payout and dividing by the share price. Analyst ratings provided by S&P Global Market Intelligence. Stocks are listed alphabetically.
Cheniere Energy
- Industry: Midstream
- Market value: $21.6 billion
- Dividend yield: N/A
- Analyst ratings: 13 Strong Buy, 7 Buy, 1 Hold, 0 Sell, 0 Strong Sell
First things first: We're talking Cheniere Energy (LNG, $85.24) – not its sister company with a similar name, Cheniere Energy Partners (CQP). Both firms are "midstream" energy infrastructure players that process and ship liquefied natural gas around the world – hence LNG's clever ticker symbol – and both have something to offer.
However, right now the "Inc." is looking a bit better than the partnership when it comes to both analyst ratings and performance; LNG is up 74% in the last 12 months, while the S&P 500 Index is up 36% and CQP is only up about 9.5%, if you're measuring by share price alone.
Part of that strong performance comes from the fact that LNG signs long-term distribution contracts, and over the last year, those remained in force even as demand declined for natural gas amid the pandemic.
It's also important to remember that even amid this trend, demand for natural gas has long been more durable than other energy products, like jet fuel or coal or even gasoline. And, as LNG is just a glorified middleman – moving and storing natural gas – it remains insulated from any pricing declines that could affect production companies.
This all added up to a rather modest operating loss last year, when some other energy stocks were deep in the red. In 2021, however, things have come roaring back in hopes of an economic recovery. Revenue is projected to jump 32% this fiscal year and another 10% in fiscal 2022.
ConocoPhillips
- Industry: Exploration and production
- Market value: $81.6 billion
- Dividend yield: 2.9%
- Analyst ratings: 18 Strong Buy, 8 Buy, 2 Hold, 0 Sell, 0 Strong Sell
Energy stocks have admittedly not had a very good run in recent years, and ConocoPhillips (COP, $60.45) largely follows that trend. Not only is COP stock still slightly down from its early 2020 highs, but it's off almost 25% from its 2018 peak.
But as with so many things on Wall Street, it's all about the future, not the past. And while recent history hasn't been particularly kind to ConocoPhillips investors, there seems to be a light at the end of the tunnel.
COP hasn't just forecast a return to profitability in 2021, it is scheduled to finish with a significant profit this fiscal year as revenue roughly doubles from 2020 levels. That top-line rebound plateaus in fiscal 2022, but thanks to increased operational efficiencies, the Big Oil giant is forecasting modest earnings per share (EPS) expansion next year, too.
And most importantly to income investors, the $1.72 per share annual dividend is more than covered, coming in at about half of 2021 projected profits.
Integrated oil is a tough business when energy prices are down and a potential long-term reduction in fossil-fuel consumption is on the horizon thanks to climate concerns. But if ever there was a time to consider giving Conoco a second chance, this may be it.
The shares have rallied 50% from their January lows, and sentiment is good as we enter the second half of the year.
Consol Energy
- Industry: Thermal coal
- Market value: $598.2 million
- Dividend yield: N/A
- Analyst ratings: 2 Strong Buy, 0 Buy, 0 Hold, 0 Sell, 0 Strong Sell
Pennsylvania-based Consol Energy (CEIX, $17.37) isn't exactly the most forward-looking of energy stocks in the age of climate change. Its primary business, after all, is thermal coal and related export services.
While the developed world is moving away from coal as an energy source, however, there is still big business for Consol to be had overseas – particularly as it is still sitting on more than 2 billion tons of proven coal reserves.
If you've been investing long enough, you have learned that even "good" companies sometimes see share price declines, and that companies on the wrong side of market-wide megatrends can still be great short-term plays if things go their way for a few months.
Consol Energy is a case study in that dynamic, as it is set to log projected revenue increases of 18% this year and swing from a modest loss in FY2020 to a pretty significant profit in FY2021.
CEIX shares have more than doubled year-to-date in part because of this, and are up an amazing 375% from their 52-week low. There's no guarantee Consol will stay here, however the optimism among Wall Street analysts coupled with near-term momentum makes this old school energy play a stock to watch.
Devon Energy
- Industry: Exploration and production
- Market value: $19.4 billion
- Dividend yield: 1.6%
- Analyst ratings: 20 Strong Buy, 7 Buy, 5 Hold, 0 Sell, 0 Strong Sell
Devon Energy (DVN, $28.60) is an independent energy company that is primarily engaged in the exploration, development and production of oil and natural gas fields. Founded in 1971, the Oklahoma-based energy firm operates some 4,000 wells across the U.S.
Needless to say, crashing energy prices in 2020 created plenty of pain for Devon. But remarkably, while other exploration and production companies were deep in the red, DVN managed to end with a FY2020 loss of just 9 cents per share.
More importantly, in 2021, Devon has come roaring back, with forecasts for $2.31 in earnings per share. Plus, revenues are set to surge more than 80% this fiscal year. That momentum is expected to continue, too, with a projected $3.10 EPS target for FY2022 – representing another 30% growth – on 10% revenue expansion.
Thanks in large part to these impressive numbers, Devon has broken out in recent months to get back to its highest levels since 2019. The company also recently declared a fixed-plus-variable quarterly dividend (which combines a fixed dividend payment along with a variable dividend that is adjusted based on market conditions) of 34 cents per share, representing a 13% increase compared to the prior quarter.
There is always a chance of another dive in energy prices that would reduce the profitability of Devon and its peers. But with continued talk of inflation and increased demands, it seems like Wall Street is unconcerned by these risks, and sees DVN as one of the best energy stocks around. Analysts as a group rate Devon a Strong Buy.
Golar LNG
- Industry: Midstream
- Market value: $1.4 billion
- Dividend yield: N/A
- Analyst ratings: 9 Strong Buy, 1 Buy, 1 Hold, 1 Sell, 0 Strong Sell
Golar LNG (GLNG, $13.16) is a unique provider of infrastructure for the natural gas industry. Like many more popular "midstream" stocks, GLNG is involved in turning the gas into liquid form, storing and transporting it, and then regasification at the end of the line.
What makes it different from some other similar energy stocks out there, however, is that it does this primarily on the water. Golar currently operates 10 LNG carriers, and three floating terminals to liquefy, store or gasify the fossil fuel.
Natural gas has a host of demand sources, from its use in power plants to industrial applications, and it is closely tied to cyclical economic activity. So it's probably no surprise that LNG-related plays crashed during the pandemic. But, they have also been on a tear as the global economy gets back on its feet. GLNG stock, specifically, has more than doubled since its late-September lows and continues to power higher.
Admittedly, Golar LNG has seen better days. It canceled its dividend even before the disruptions caused by the pandemic. Plus, the stock is trading for roughly one-third the price it commanded at its 2018 peak.
But Wall Street analysts seem encouraged by the turnaround prospects here and are increasingly bullish on this unique midstream LNG play right now.
Green Plains
- Industry: Specialty chemicals
- Market value: $1.6 billion
- Dividend yield: N/A
- Analyst ratings: 4 Strong Buy, 4 Buy, 0 Hold, 0 Sell, 0 Strong Sell
If you want to mix it up from the rather straightforward energy stocks on this list, Omaha-based Green Plains (GPRE, $32.40) is a unique chemicals company that ranks as one of the leading producers of ethanol in the U.S.
GPRE also provides materials and liquids to whiskey makers and other distillers, but the ethanol business is roughly 80% of the company's revenue, so this is decidedly a biofuels play.
As you may or may not know, ethanol is produced from corn and is seen by some as a sustainable fuel source for the transportation sector – and more importantly, conventional gasoline contains about 10% ethanol right now. That adds up to big growth potential as the economy gets back on track and people start traveling by car and truck again this summer.
Admittedly, year-over-year comps are still unpleasant. In its Q1 earnings report, Green Plains said it sold 178 million gallons of ethanol during the first quarter of 2021 – a huge figure, but down more than 25% from Q1 2020 before the worst of the pandemic hit.
And since the supply chain in biofuels isn't made to ramp up quickly, as the ethanol has to be made then added to gas before it's sent to the pump, GPRE is still projected to operate in the red this fiscal year.
But Wall Street is confident of a return to profitability in the coming months and significant earnings in fiscal 2022. GPRE shares have almost doubled since the first of the year on this optimism, and are currently trading at the highest levels since 2015.
National Energy Services Reunited
- Industry: Equipment and services
- Market value: $1.4 billion
- Dividend yield: N/A
- Analyst ratings: 3 Strong Buy, 3 Buy, 0 Hold, 0 Sell, 0 Strong Sell
Texas-based National Energy Services Reunited (NESR, $15.00) has a rather amusing name that conjures some kind of romantic union between oil barons. But the real love affair here is between international oil drillers and NESR, which prides itself on its global reach and regional expertise.
National Energy Services boasts more than 5,000 employees representing more than 60 nationalities in over 16 countries. And its services span a wide array of offerings including hydraulic fracturing, filtration, pumping, drilling, evaluation and testing to name a few.
Of particular interest to investors of energy stocks should be NESR's focused approach to the Middle East and Northern Africa segment, or MENA, which continues to be a major source of oil production. And unlike developed nations like those in Europe, MENA is less inclined to pull back on fossil fuels despite global climate concerns, or to rethink export relationships to emerging markets.
Consider that National Energy Services Reunited was one of the few energy service stocks to post an operating profit last year, and that those earnings per share are set to surge roughly 45% this fiscal year on 18% revenue growth. Plus, EPS are projected to jump nearly 60% in fiscal 2022 on 21% revenue growth.
This shows that NESR isn't just a rebound stock in the oil patch, but a company actually accelerating growth beyond the short-term uptrend from pandemic lows. That bodes very well for investors, as evidenced by the fact shares are up more than 50% year-to-date with no sign of slowing down.
PDC Energy
- Industry: Exploration and production
- Market value: $4.6 billion
- Dividend yield: 1.1%
- Analyst ratings: 12 Strong Buy, 3 Buy, 1 Hold, 0 Sell, 0 Strong Sell
Independent exploration and production company PDC Energy (PDCE, $46.22) is an oil and natural gas firm formerly known as the Petroleum Development Corporation before a rebranding about 10 years ago. The longer history of this roughly $5 billion name goes back to 1969, and spans plenty of volatility in global energy markets – experience that undoubtedly came in handy over the last 18 months.
While plenty of energy stocks out there have struggled to turn a profit, PDCE managed to tighten its belt and rely on reserves to weather the downturn. This helped it quickly capitalize on the higher energy prices we've seen more recently.
On the charts, the stock has roughly tripled in the last 12 months. Off the charts, revenue is set to increase 30% this fiscal year and another 17% in fiscal 2022. And, despite some peers still struggling, PDCE has declared plans to pay its first-ever dividend on June 24.
What's more, Wall Street's consensus target for the stock is just shy of $57 a share – hinting another 22% upside could be in store for shareholders. This short-term momentum, long-term commitment to shareholders via dividends and general uptrend for energy prices all adds up to a favorable outlook for this top-rated energy stock.
Talos Energy
- Industry: Exploration and production
- Market value: $1.5 billion
- Dividend yield: N/A
- Analyst ratings: 5 Strong Buy, 2 Buy, 1 Hold, 0 Sell, 0 Strong Sell
Shares of Talos Energy (TALO, $18.14) provide a vivid illustration of the risks and potential rewards in small energy production plays.
Valued at just over $1 billion, TALO doesn't have the deep pockets of larger energy stocks. So when oil rolled over in 2020, this stock plunged to an all-time low of under $6 a share, a decline of more than 80% from its 2018 highs.
But Talos muddled through, both with belt-tightening and accounting tricks, like converting outstanding debts to equity. And when oil prices recovered, it began slowly getting back to the business of operating its wells that boast more than 160 million barrels of oil equivalents and almost 260 million cubic feet of natural gas.
TALO was still under $6 as recently as November. And even this fiscal year, the oil exploration and production name is projected to operate at a loss despite an impressive forecast of 70% revenue expansion.
But Wall Street analysts collectively have decided that the worst is over and that TALO isn't just going to survive, but could in fact thrive in the next year or two. Shares have doubled since January as a result, and there could be more room to run.
Admittedly, the fundamentals aren't there just yet to support this move. But, as with many smaller energy stocks, you have to look ahead to really capitalize on the potential. TALO is risky, but as recent months have shown, it can also deliver huge rewards if the chips fall right.
Whiting Petroleum
- Industry: Exploration and production
- Market value: $2.1 billion
- Dividend yield: N/A
- Analyst ratings: 6 Strong Buy, 0 Buy, 2 Hold, 0 Sell, 0 Strong Sell
Whiting Petroleum (WLL, $53.99) is an independent oil-and-gas company, operating out of Colorado and focusing mainly on development and production of energy fields in the Rocky Mountain region. As of the end of last year, Whiting had interests in nearly 2,200 productive wells and estimated reserves of 260 million barrels of oil and equivalents.
As with other energy stocks on this list, having oil prices back above $70 per barrel has been a tremendous boon for WLL and its shareholders. And these tailwinds are likely to persist, with forecasts of continued inflationary pressures to come.
Consider that after posting a loss of $3.83 per share in fiscal 2021, Whiting is forecast to swing to a profit of $8.40 per share this year. That's an amazing turnaround, driven by a 35% jump in revenue and much better margins thanks to rising crude prices.
At roughly $2 billion in market value, Whiting is not as small and at-risk as the tiny exploration and production stocks out there that have to pump frantically during tough times just to keep the lights on.
As a result of both its more substantive operations and industry-wide tailwinds, WLL stock has doubled so far in 2021 and is flirting with highs not seen since 2018.
