In this article, we discuss oil price predictions and the 10 best energy stocks to buy according to hedge funds.
The energy industry had a record 2021 with oil stocks climbing to the top of the S&P 500 leaderboards on multiple occasions as prices touched new highs and demand surged following the easing of lockdown restrictions. Even though market experts had expected the rally to be short-lived, an OPEC disagreement over production cuts and colder-than-expected winters combined to keep prices high even after the initial euphoria of the recovery had subsided. The resurgence of the virus in late 2021, though, put a damper on the spirits at the turn of the year.
Bullish Analysts, Ukraine Crisis, and Oil Futures in 2022
Looking ahead to 2022, analysts expect oil prices to remain at near peak levels as governments around the world put in place milder restrictions, compared to 2020, amid a new virus surge. Jeffrey Halley, senior market analyst at OANDA, told news agency Reuters in January that the ability of OPEC countries to raise output remains limited and oil futures look positive barring a massive slowdown in the Chinese economy. Investment bank Morgan Stanley expects Brent crude to hit $100 per barrel in the third quarter of 2022.
Similarly, JPMorgan analysts believe that oil prices could rise by as much as $30 in the coming months. The emergence of a political crisis in Ukraine that involves Russia, one of the top oil-producing countries in the world, has pushed oil prices even higher. With an early solution to the crisis unlikely and the specter of sanctions hanging over the energy powerhouse, it seems that oil futures will continue to be influenced by events in the region in the coming months.
Investors eager to profit from this boom should consider some top energy stocks to buy now that include Exxon Mobil Corporation (NYSE:XOM), Cheniere Energy (NYSE:LNG), and ConocoPhillips (NYSE:COP), among others discussed in detail below.
Our Methodology
The companies that operate in the energy sector and have received positive analyst coverage for 2022 were selected for the list of the best energy stocks to buy for 2022. The business fundamentals and analyst ratings for these firms are also discussed to provide readers with some context for their investment choices.
Data from around 900 elite hedge funds tracked by Insider Monkey was used to identify the number of hedge funds that hold stakes in each firm.
Photo by Zbynek Burival on Unsplash
Best Energy Stocks To Buy For 2022
10. Golar LNG Limited (NASDAQ:GLNG)
Number of Hedge Fund Holders: 20
Golar LNG Limited (NASDAQ:GLNG) operates as an LNG provider. Late last year, the company had announced that it would be spinning off the carrier fleet part of the firm, lowering the overall debt levels of Golar LNG Limited (NASDAQ:GLNG) and adding a few hundred million in liquidity. On January 20, Golar LNG Limited (NASDAQ:GLNG) revealed that the spinoff had secured a sustainability-inked loan worth $570 million for the purchase of six gas carriers. The offloading of the carrier fleet allows Golar LNG Limited (NASDAQ:GLNG) to concentrate on FLNG projects.
The benefits of this renewed focus, expected to drive revenues for Golar LNG Limited (NASDAQ:GLNG) as FLNG projects come online, have turned hedge funds bullish on the stock. At the end of the third quarter of 2021, 20 hedge funds in the database of Insider Monkey held stakes worth $317 million in Golar LNG Limited (NASDAQ:GLNG), up from 17 the preceding quarter worth $360 million.
Just like Exxon Mobil Corporation (NYSE:XOM), Cheniere Energy (NYSE:LNG), and ConocoPhillips (NYSE:COP), Golar LNG Limited (NASDAQ:GLNG) is one of the stocks attracting the attention of elite investors.
In its Q3 2020 investor letter, Horos Asset Management, an asset management firm, highlighted a few stocks and Golar LNG Limited (NASDAQ:GLNG) was one of them. Here is what the fund said:
“At the end of August, Golar LNG’s subsidiary, Hygo Energy Transition (formerly Golar Power), announced its intention to go public through an IPO (sale of new shares issued with a capital raise). The aim of this move was to raise funds to finance its expansion in electricity generation and liquefied natural gas distribution. The valuation range released by Golar LNG Limited (NASDAQ:GLNG) for this subsidiary turned out to be significantly higher than our own valuation as well as the analyst estimates, which caused the stock to rally by 45% following the announcement.
However, on 23 September, an accusation against Eduardo Antonello, Hygo’s CEO, was made public. Specifically, he was accused of being involved in the incrimination of the oil drilling company Seadrill, where he worked until 2015, for bribes made in 2014. Following this announcement, Golar LNG’s share price plummeted by more than 30% in a single day and it was forced to suspend Hygo’s IPO, in addition to dismissing Antonello. Golar LNG Limited (NASDAQ:GLNG) claims that whatever happened to Antonello’s previous job position has no impact on Hygo. In our opinion, the tenders in Brazil conducted in recent years are especially transparent, with a computerized process, in which the submission of bids is done telematically. That said, an accusation of this nature is not good news for the company, whatever the result, since the reputational damage is high, takes some time to be repaired and may end up affecting the awarding of new contracts in this area. As of writing, Hygo’s valuation represents just over 25% of the value of the Golar LNG Limited (NASDAQ:GLNG).
Despite this, we still believe that Golar LNG Limited (NASDAQ:GLNG) has a high upside potential, not only because of the value of Hygo, but also because of other parts of the business, such as FLNGs (ships that liquefy natural gas at sea), where Golar LNG is one of the pioneers and most experienced and successful players in this market. Proof of this is that Golar LNG has restarted the manufacture of the FLNG Gimi—let’s recall that their client, BP, had asked for a 1-year delay in the manufacture, alluding to force majeure causes.”
9. Plug Power Inc. (NASDAQ:PLUG)
Number of Hedge Fund Holders: 20
Plug Power Inc. (NASDAQ:PLUG) provides hydrogen fuel cell solutions. On January 20, Morgan Stanley analyst Stephen Byrd maintained an Overweight rating on Plug Power Inc. (NASDAQ:PLUG) stock with a price target of $65, highlighting that a recent selloff seemed “overdone” given the strong fundamentals of the firm and the key deliverables that Plug Power Inc. (NASDAQ:PLUG) laid out for 2022. The analyst identified a recent drop in the share price as a “good buying opportunity” for investors.
Several elite hedge funds remain invested in Plug Power Inc. (NASDAQ:PLUG) as tech-driven firms undergo a period of prolonged volatility. Among the hedge funds being tracked by Insider Monkey, New York-based investment firm DE Shaw is a leading shareholder in Plug Power Inc. (NASDAQ:PLUG) with 7.5 million shares worth more than $192 million.
In its Q2 2020 investor letter, Massif Capital, an asset management firm, highlighted a few stocks and Plug Power Inc. (NASDAQ:PLUG) was one of them. Here is what the fund said:
“We also closed our short position in Plug Power Inc. (NASDAQ:PLUG) this quarter as the market was subsumed with enthusiasm over their recent acquisitions, resulting in an almost 80% rally in the stock over ten trading days. Our decision to exit was painful at the time as we were forced to reconcile with a collective exuberance that was (and is, in our opinion) not grounded reality. In hindsight, it was the correct decision as we avoided most of its recent vertical trajectory.”
PLUG shares were trading above $65 nearly a year ago.
8. Green Plains Inc. (NASDAQ:GPRE)
Number of Hedge Fund Holders: 29
GPRE ranks 8th on our list of the 10 best energy stocks to buy for 2022. Green Plains Inc. (NASDAQ:GPRE) markets ethanol products. Top hedge funds have high hopes that the company can deliver in the biofuel market. Among the hedge funds being tracked by Insider Monkey, New York-based investment firm Rubric Capital Management is a leading shareholder in Green Plains Inc. (NASDAQ:GPRE) with 1.3 million shares worth more than $43 million.
On January 18, Evercore ISI analyst Todd Firestone upgraded Green Plains Inc. (NASDAQ:GPRE) stock to Outperform from In Line with a price target of $48, underlining that the company was increasing focus on the production of ultra high proteins that would increase margins in the long term, establish it as a profitable entity, and drive earnings growth.
7. Cameco Corporation (NYSE:CCJ)
Number of Hedge Fund Holders: 35
Cameco Corporation (NYSE:CCJ) produces and sells uranium. Last year, ten nations petitioned the European Union to include uranium in the list of green energy sources due to the low emissions profile of uranium. A global energy crisis, triggered in part by unreliable solar and wind power plants, and the carbon footprint of oil and gas, have helped increase the demand of uranium and push prices higher in recent months. Cameco Corporation, one of the premier uranium firms, can benefit from these catalysts in 2022.
Major hedge funds remain positive on the long-term prospects of Cameco Corporation (NYSE:CCJ). Among the hedge funds being tracked by Insider Monkey, Florida-based investment firm Kopernik Global Investors is a leading shareholder in Cameco Corporation (NYSE:CCJ) with 8.9 million shares worth more than $194 million.
6. Pioneer Natural Resources Company (NYSE:PXD)
Number of Hedge Fund Holders: 48
Pioneer Natural Resources Company (NYSE:PXD) is an independent oil and gas firm. It is one of the most reliable energy stocks on the market, having registered 17 consecutive years of payouts to shareholders and 4 uninterrupted years of dividend growth. It is also one of the largest operators in the rich Permian Basin, a place that produces elite quality crude oil. Pioneer Natural Resources Company (NYSE:PXD) remains in a strong position to benefit from the high prices of oil in 2022 and pass these benefits to shareholders.
This is why elite hedge funds are bullish on Pioneer Natural Resources Company (NYSE:PXD) at the beginning of 2022. Among the hedge funds being tracked by Insider Monkey, Boston-based investment firm Adage Capital Management is a leading shareholder in Pioneer Natural Resources Company (NYSE:PXD) with 1.5 million shares worth more than $262 million.
In addition to Exxon Mobil Corporation (NYSE:XOM), Cheniere Energy (NYSE:LNG), and ConocoPhillips (NYSE:COP), Pioneer Natural Resources Company (NYSE:PXD) is one of the stocks that institutional investors are buying.
In its Q3 2021 investor letter, ClearBridge Investments, an asset management firm, highlighted a few stocks and Pioneer Natural Resources Company (NYSE:PXD) was one of them. Here is what the fund said:
“Over the last year we have also added a position in Pioneer Natural Resources Company (NYSE:PXD), a best-in-class producer in the Permian Basin. We added Pioneer Natural Resources Company (NYSE:PXD) as we anticipated rising commodity prices and sought more direct leverage to that trend. Our overweight to energy has benefited our performance this year, in particular through the first half of the year, and we believe the sector, still less than 3% of the S&P 500, remains underinvested and attractive going forward.”
5. Devon Energy Corporation (NYSE:DVN)
Number of Hedge Fund Holders: 48
Devon Energy Corporation (NYSE:DVN) is an independent oil and gas firm. The company looks set to benefit from the political crisis in Ukraine that has driven the prices of oil higher in recent days after a quiet start to the new year. On January 25, seven out of eight top gainers on the growth-heavy S&P 500 were energy stocks. Russia, one of the top oil producers in the world, is a critical source of energy for Europe and Asia, and an escalation in Ukraine or talk of sanctions could send oil prices surging further in the coming weeks.
The hedge fund sentiment around Devon Energy Corporation (NYSE:DVN) makes for bullish reading as well. Among the hedge funds being tracked by Insider Monkey, Florida-based investment firm GQG Partners is a leading shareholder in Devon Energy Corporation (NYSE:DVN) with 13.9 million shares worth more than $493 million.
In its Q4 2020 investor letter, GoodHaven Capital Management, an asset management firm, highlighted a few stocks and Devon Energy Corporation (NYSE:DVN) was one of them. Here is what the fund said:
“After a rough start to the year our two biggest energy holdings – WPX Energy rebounded materially in the last six months though energy was still our biggest detractor for the year. I’ve previously written about deciding earlier this year to direct new capital towards better businesses versus adding more to the energy sector, but given the material optionality at WPX, we opted to maintain a material exposure. Recently WPX announced an all stock merger with a larger competitor – Devon Energy – which will leave the new company with plenty of cash flow at lower oil prices, less leverage, and material upside to higher commodity prices.”
4. Cheniere Energy, Inc. (NYSE:LNG)
Number of Hedge Fund Holders: 49
Cheniere Energy, Inc. (NYSE:LNG) is an energy infrastructure firm. A healthy number of top hedge funds hold large stakes in the company. At the end of the third quarter of 2021, 49 hedge funds in the database of Insider Monkey held stakes worth $3.1 billion in Cheniere Energy, Inc. (NYSE:LNG), the same as in the previous quarter worth $2.9 billion.
On January 18, Mizuho analyst Robert Mosca kept a Buy rating on Cheniere Energy, Inc. (NYSE:LNG) stock and raised the price target to $128 from $122, underlining that international gas dislocations could improve the outlook for the firm through 2022 in “Phase 4” expansion.
3. ConocoPhillips (NYSE:COP)
Number of Hedge Fund Holders: 49
ConocoPhillips (NYSE:COP) engages in oil and gas exploration and production. The stock has several near-term growth catalysts, including a variable dividend policy, the surge in the share price of natural gas firm Cenovus, and the contingency payments that Conoco expects from Cenovus in the coming months as gas prices register new highs. ConocoPhillips (NYSE:COP) has a large stake in Cenovus. Truist analyst Neal Dingmann recently raised the price target on ConocoPhillips (NYSE:COP) stock to $111 from $100 and kept a Buy rating.
Hedge funds are also bullish on ConocoPhillips (NYSE:COP) as a new fiscal year gets underway. At the end of the third quarter of 2021, 49 hedge funds in the database of Insider Monkey held stakes worth $1.3 billion in ConocoPhillips (NYSE:COP).
In its Q1 2021 investor letter, ClearBridge Investments highlighted a few stocks and ConocoPhillips (NYSE:COP) was one of them. Here is what the fund said:
“While reducing in health care and consumer staples, we increased our exposure to high-quality names in economically sensitive areas of the market. We added to low-cost, high-quality energy names (including) ConocoPhillips. We are positive on the company’s strong balance sheets, competitive positions and exposure to an economic recovery.”
2. Chevron Corporation (NYSE:CVX)
Number of Hedge Fund Holders: 51
Chevron Corporation (NYSE:CVX) is one of the most dependable options in the oil and gas space. In a volatile market, the stock could provide investors with valuable cover and healthy dividends. Chevron Corporation (NYSE:CVX) has registered an incredible 34 years of consecutive dividend growth. This achievement alone speaks volume about the financial stability of the firm and its ability to deliver in bull and bear markets. The stock also stands to benefit from the high energy prices in 2022.
A growing number of hedge funds are piling into Chevron Corporation (NYSE:CVX) stock as inflation fears reach fever pitch. At the end of the third quarter of 2021, 51 hedge funds in the database of Insider Monkey held stakes worth $4.4 billion in Chevron Corporation (NYSE:CVX), up from 50 in the preceding quarter worth $4.2 billion.
In its Q1 2021 investor letter, ClearBridge Investments highlighted a few stocks and Chevron Corporation (NYSE:CVX) was one of them. Here is what the fund said:
“While reducing in health care and consumer staples, we increased our exposure to high-quality names in economically sensitive areas of the market. We added to low-cost, high-quality energy names, (including) Chevron. We are positive on the company’s strong balance sheets, competitive positions and exposure to an economic recovery.”
1. Exxon Mobil Corporation (NYSE:XOM)
Number of Hedge Fund Holders: 64
Exxon Mobil Corporation (NYSE:XOM) is an integrated oil and gas firm. Several elite hedge funds hold large stakes in the company. At the end of the third quarter of 2021, 64 hedge funds in the database of Insider Monkey held stakes worth $4.6 billion in Exxon Mobil Corporation (NYSE:XOM), compared to 64 in the preceding quarter worth $3.6 billion.
The legacy oil business of Exxon Mobil Corporation (NYSE: XOM) is thriving and the investments of the firm in emerging energy are also starting to pay off. A renewed focus towards ESG also looks set to help Exxon Mobil Corporation (NYSE: XOM) assuage investor concerns about sustainability as well.
In its Q1 2021 investor letter, Harding Loevner highlighted a few stocks and Exxon Mobil Corporation (NYSE:XOM) was one of them. Here is what the fund said:
“We felt that our remaining energy holding, ExxonMobil, with its stronger balance sheet, was in a better position to ride out the cyclical slump in oil demand and even perhaps take advantage of it by investing counter-cyclically. While ExxonMobil does plan to increase capital expenditure, we’ve been disappointed in its regrettable failure to address ongoing emission trends, which reflects poorly on management’s foresight. As a result, we sold our ExxonMobil holdings.”
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Disclosure. None. 10 Best Energy Stocks To Buy For 2022 is originally published on Insider Monkey.
