In this article, we discuss the 12 best affordable energy stocks to buy now.
The energy sector comprises a variety of industries that include heavy hitters like renewable energy, electric power, nuclear power, and coal, in addition to oil and gas. These sub-sectors have started to slowly eat away at the dominance of the latter duo in the energy space, in part due to new ESG initiatives adopted by many businesses in the wake of global concerns around climate change. The energy services sector, comprising the sale of technology, energy, analytics, access to the grid, and personalized services, has also grown.
The global energy demand has been rising slowly, increasing at an average rate of around 2% in the past four decades. The Chinese dominate the numbers in terms of new demand, with other big economies like the United States, India, and Russia following close behind. According to a recent report by Fortune Business Insight, the global energy as a service market is expected to grow from $70.46 billion in 2022 to $147.56 billion by 2029, at an impressive compound annual growth rate of 11.1%.
The energy services market was severely impacted by the pandemic and the Russian war in Ukraine in the past two years. Even as demand rises, there has been a marked decline in commercial and industrial activities in the energy sector. As per the report by Economist Intelligence, energy consumption demand grew by a very small number in 2022 due to high prices and a contraction in gas and oil supplies from Russia. For the remainder of 2022, oil prices are likely to remain above US$100/b as long as conflict rages in Ukraine.
Meanwhile, gas prices will rise by at least 50% this year, per the report. This is due to disruption of supply chains which will come from three sources: difficulties affecting land-based routes; restrictions on air links; and the cancellation of sea freight routes from Ukraine. The EIU estimates that global energy consumption will grow at a healthier pace in 2023 due to these factors. Some top firms working in the sector include Devon Energy Corporation (NYSE:DVN), ConocoPhillips (NYSE:COP), and Chevron Corporation (NYSE:CVX).
EIU also notes that a shift towards renewable energy sources is a major theme in the industry that new investors must be wary of. According to Bloomberg, from 2010 to 2019, the renewable energy resources collectively drew around $2.9 trillion in investments. Solar energy accounts for 8% of the global energy generation and wind energy accounts for 9%, as of 2022. Governments are likely to invest more in the renewable energy production sectors due to recession fears, geopolitical tensions, and fears of regional conflicts affecting supplies.
Our Methodology
The companies that operate in the energy sector and were trading at below $50 per share, as of December 1, were selected for the list. Special importance was assigned to outlining the basic business fundamentals and analyst ratings for each firm to provide readers with some context so they can make more informed investment choices. Data from around 900 elite hedge funds tracked by Insider Monkey in the third quarter of 2022 was used to identify the number of hedge funds that hold stakes in each firm.
Best Affordable Energy Stocks to Buy Now
12. Fuel Tech, Inc. (NASDAQ:FTEK)
Number of Hedge Fund Holders: 2
Share Price as of December 1: $1.24
Fuel Tech, Inc. (NASDAQ:FTEK) provides boiler optimization, efficiency improvement, and air pollution reduction and control solutions to utility and industrial customers worldwide. On November 3, Ful Tech disclosed that it got multiple air pollution contracts from new and existing customers in the US. The contracts have an aggregate value of $2.7 million. The company got orders for its ULTRA systems from the Midwest, West Coast and Western US.
Among the hedge funds being tracked by Insider Monkey, New York-based investment firm Renaissance Technologies is a leading shareholder in Fuel Tech, Inc. (NASDAQ:FTEK) with 776,416 shares worth more than $908,000.
Unlike Devon Energy Corporation (NYSE:DVN), ConocoPhillips (NYSE:COP), and Chevron Corporation (NYSE:CVX), Fuel Tech, Inc. (NASDAQ:FTEK) is one of the more affordable stocks to buy now in the energy sector.
11. Ocean Power Technologies, Inc. (NYSE:OPTT)
Number of Hedge Fund Holders: 2
Share Price as of December 1: $0.62
Ocean Power Technologies, Inc. (NYSE:OPTT) develops and commercializes proprietary systems that generate electricity by harnessing the renewable energy of ocean waves in North America, South America, Europe, and Asia. On October 5, Ocean Power Technologies said that it was awarded a $529,025 procurement contract by Amentum Services. Ocean Power will assist Amentum in providing the Department of Defense and Information Analysis Center with land, air, space, and port & coastal surveillance services in support of the US Department of Homeland Security Science & Technology Directorate.
At the end of the third quarter of 2022, 2 hedge funds in the database of Insider Monkey held stakes worth $223,000 in Ocean Power Technologies, Inc. (NYSE:OPTT), compared to 3 the preceding quarter worth $324,000.
10. NACCO Industries, Inc. (NYSE:NC)
Number of Hedge Fund Holders: 4
Share Price as of December 1: $45.26
NACCO Industries, Inc. (NYSE:NC) engages in the natural resources business. On November 17, NACCO Industries announced that it will pay a dividend of $0.2075 per share on the 15th of December. The dividend yield was 1.8%, which is below the average for the energy industry but impressive considering the size of the firm.
Among the hedge funds being tracked by Insider Monkey, New York-based investment firm Renaissance Technologies is a leading shareholder in NACCO Industries, Inc. (NYSE:NC) with 223,917 shares worth more than $10.5 million.
9. Natural Resource Partners L.P. (NYSE:NRP)
Number of Hedge Fund Holders: 4
Share Price as of December 1: $42.14
Natural Resources Partners L.P. (NYSE:NRP) owns, manages, and leases a portfolio of mineral properties in the United States. On October 27, Natural Resource Partners and Occidental Petroleum’s Low Carbon Ventures subsidiary unveiled an agreement for the evaluation and potential development of a permanent carbon dioxide sequestration hub in South Texas.
At the end of the third quarter of 2022, 4 hedge funds in the database of Insider Monkey held stakes worth $26 million in Natural Resources Partners L.P. (NYSE:NRP), compared to 3 in the preceding quarter worth $20.6 million.
8. Broadwind, Inc. (NASDAQ:BWEN)
Number of Hedge Fund Holders: 6
Share Price as of December 1: $1.74
Broadwind, Inc. (NASDAQ:BWEN) manufactures and sells structures, equipment, and components for clean tech and other specialized applications primarily in the United States. On September 19, Broadwind revealed that it received $38 million in new tower orders from a leading global wind turbine manufacturer. It will manufacture the towers at its Abilene, Texas facility. The company expects to complete production in the first half of 2023.
Among the hedge funds being tracked by Insider Monkey, New York-based investment firm Millennium management is a leading shareholder in Broadwind, Inc. (NASDAQ:BWEN) with 176,825 shares worth more than $534,000.
7. FuelCell Energy, Inc. (NASDAQ:FCEL)
Number of Hedge Fund Holders: 12
Share Price as of December 1: $3.46
FuelCell Energy, Inc. (NASDAQ:FCEL) designs, manufactures, sells, installs, operates, and services stationary fuel cell power plants for distributed baseload power generation. On September 8, FuelCell Energy posted earnings for the third quarter of 2022, reporting losses per share of $0.08, missing market estimates by $0.02. The revenue over the period was $42.1 million, up 60.8% compared to the revenue over the same period last year and beating market estimates by $7.94 million.
On October 19, Jefferies analyst Sam Burwell initiated coverage of FuelCell Energy, Inc. (NASDAQ:FCELL) stock with a Hold rating and $3 price target, highlighting that the Option Value of energy is up again which is driven by a constrained capital cycle.
At the end of the third quarter of 2022, 12 hedge funds in the database of Insider Monkey held stakes worth $57 million in FuelCell Energy, Inc. (NASDAQ:FCEL), compared to 10 in the previous quarter worth $62.8 million.
6. Enterprise Products Partners L.P. (NYSE:EPD)
Number of Hedge Fund Holders: 21
Share Price as of December 1: $24.81
Enterprise Products Partners L.P. (NYSE:EPD) provides midstream energy services to producers and consumers of natural gas, natural gas liquids (NGLs), crude oil, petrochemicals, and refined products. On November 1, Enterprise Products Partners posted earnings for the third quarter of 2022, reporting earnings per share of $0.62, missing market estimates by $0.01. The revenue over the period was $15.46 billion, up 42.8% compared to the revenue over the same period last year and beating market estimates by $1.64 billion.
At the end of the third quarter of 2022, 21 hedge funds in the database of Insider Monkey held stakes worth $221.6 million in Enterprise Products Partners L.P. (NYSE:EPD), compared to 23 in the preceding quarter worth $184.4 million.
In contrast to Devon Energy Corporation (NYSE:DVN), ConocoPhillips (NYSE:COP), and Chevron Corporation (NYSE:CVX), Enterprise Products Partners L.P. (NYSE:EPD) is one of the more affordable stocks to buy now in the energy sector.
In its Q2 2022 investor letter, Fairholme Capital Management, an asset management firm, highlighted a few stocks and Enterprise Products Partners L.P. (NYSE:EPD) was one of them. Here is what the fund said:
“Enterprise Products Partners L.P. (NYSE:EPD) is the largest position in the Fund. Enterprise provides processing and transportation services to producers and consumers of natural gas, natural gas liquids, and oil. These hydrocarbons are critical for modern life and have few if any, ready substitutes. Commodity prices do not greatly affect the company’s toll road fees. Enterprise is priced at less than nine times distributable cash flows and pays a 7.5% cash distribution.”
5. Plug Power Inc. (NASDAQ:PLUG)
Number of Hedge Fund Holders: 32
Share Price as of December 1: $15.96
Plug Power Inc. (NASDAQ:PLUG) delivers end-to-end clean hydrogen and zero-emissions fuel cell solutions for supply chain and logistics applications, on-road electric vehicles, stationary power markets, and others in North America and internationally. On October 19, Plug Power and Lin Corp, an American manufacturer of ammunition, sodium hydroxide and chlorine, planned a joint venture for the construction of a 15 tons per day hydrogen plant in St. Gabriel, La. Plug Power will be the exclusive marketer of this joint venture’s hydrogen.
On November 10, Truist analyst Bronson Fleig maintained a Hold rating on Plug Power Inc. (NASDAQ:PLUG) stock and lowered the price target to $18 from $32, noting that the company missed the third quarter earnings estimates by a substantial margin.
Among the hedge funds being tracked by Insider Monkey, Chicago-based investment firm Citadel Investment Group is a leading shareholder in Plug Power Inc. (NASDAQ:PLUG) with 118.5 million shares worth more than $498.5 million.
4. Petróleo Brasileiro S.A. – Petrobras (NYSE:PBR)
Number of Hedge Fund Holders: 33
Share Price as of December 1: $11.69
Petróleo Brasileiro S.A. – Petrobras (NYSE:PBR) explores for, produces, and sells oil and gas in Brazil and internationally. On November 18, Petroleo unveiled that it had canceled the sale process of the Regap oil refinery in Brazil’s Minas Gerais state after receiving an insufficient offer for the facility.
Among the hedge funds being tracked by Insider Monkey, California-based investment firm GQG Partners is a leading shareholder in Petróleo Brasileiro S.A. – Petrobras (NYSE:PBR) with 214.2 million shares worth more than $2.6 billion.
3. Kinder Morgan, Inc. (NYSE:KMI)
Number of Hedge Fund Holders: 38
Share Price as of December 1: $19.12
Kinder Morgan, Inc. (NYSE:KMI) operates as an energy infrastructure company in North America. On September 27, Kinder Morgan noted that it sold a 25.5 % equity interest in Elba Liquefaction to an undisclosed financial buyer for $565 million. The value of the equity interest entails an enterprise value of $2.3 billion for Elba, or 13x estimated 2022 EBITDA.
On October 19, Barclays analyst Theresa Chen maintained an Equal Weight rating on Kinder Morgan, Inc. (NYSE:KMI) stock and lowered the price target to $20 from $21, noting that the defensiveness of the core assets in the North America midstream and refining space is satisfactory despite macro headwinds, including those levered to liquefaction and Mid-Con liquids transportation.
At the end of the third quarter of 2022, 38 hedge funds in the database of Insider Monkey held stakes worth $1.1 billion in Kinder Morgan, Inc. (NYSE:KMI), compared to 41 in the previous quarter worth $1.2 billion.
2. Suncor Energy Inc. (NYSE:SU)
Number of Hedge Fund Holders: 45
Share Price as of December 1: $32.87
Suncor Energy Inc. (NYSE:SU) operates as an integrated energy company. On October 26, Suncor Energy said that it agreed to buy an additional 21.3% stake in the Fort Hills oil sands project and associated sales and logistic agreements from Teck Resources for C$1 billion in cash.
On November 21, Credit Suisse analyst William Janela maintained an Outperform rating on Suncor Energy Inc. (NYSE:SU) stock and lowered the price target to C$60 from C$63.
At the end of the third quarter of 2022, 45 hedge funds in the database of Insider Monkey held stakes worth $2 billion in Suncor Energy Inc. (NYSE:SU), compared to 47 in the preceding quarter worth $2.4 billion.
In its Q1 2022 investor letter, ClearBridge Investments, an asset management firm, highlighted a few stocks and Suncor Energy Inc. (NYSE:SU) was one of them. Here is what the fund said:
“Also, within the structural bucket, we added to our commodity exposure with the purchase of Suncor Energy (NYSE:SU). Suncor, a past holding, is a Canadian integrated oil company where we capitalized on an attractive valuation due to a COVID-19-induced slowdown. We expect a recovery in oil demand and strong pricing will result in faster-than-expected free cash flow growth and financial deleveraging.
The structural bucket has the shortest investment horizon across the spectrum of growth companies we target in the Strategy. We closely monitor the macro impacts and turnaround progress of these companies and will be disciplined sellers when the thesis for a holding plays out.”
1. APA Corporation (NASDAQ:APA)
Number of Hedge Fund Holders: 47
Share Price as of December 1: $46.85
APA Corporation (NASDAQ:APA) explores for, develops, and produces oil and gas properties. On November 28, APA Corporation revealed that it has provided an update on exploration activities in Block 58 offshore Suriname. Total Energies is the operator on the block with 50% working interest and APA holds 50% work interest.
On November 17, Piper Sandler analyst Mark Lear maintained a Neutral rating on APA Corporation (NASDAQ:APA) stock and raised the price target to $49 from $46, noting that production models and fiscal 2023 outlooks are updated post the third quarter results.
Among the hedge funds being tracked by Insider Monkey, Chicago-based firm Harris Associates is a leading shareholder in APA Corporation (NASDAQ:APA) with 13.4 million shares worth more than $456.6 million.
In its Q1 2022 investor letter, Oakmark Funds, an asset management firm, highlighted a few stocks and APA Corporation (NASDAQ:APA) was one of them. Here is what the fund said:
“Our oil holding, APA Corporation (NASDAQ:APA) (+54%) was one of our top contributors in the quarter as oil prices rallied due to tight supplies, which were then exacerbated by the Russian invasion of Ukraine. Although their share prices have increased considerably, both companies still look quite undervalued even using longer-term oil prices in the $65-70 dollar range. Meanwhile, if times are good over the next couple of years, we expect these companies to return significant percentages of their market caps to shareholders.”
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Disclosure. None. 12 Best Affordable Energy Stocks to Buy Now is originally published on Insider Monkey.
