In this article, we discuss 5 energy stocks to watch amid the uncertainty in oil markets. If you want to read our detailed analysis of these stocks and the current market situation, go directly to Goldman Sachs’ Latest Prediction on Oil Prices and 10 Energy Stocks to Watch.
5. Chesapeake Energy Corporation (NASDAQ:CHK)
Number Of Hedge Fund Holders: 59
Chesapeake Energy Corporation (NASDAQ:CHK) is an Oklahoma-based company that engages in the acquisition, exploration and development of properties for the production of oil, natural gas and natural gas liquids from underground reservoirs.
On July 18, Goldman Sachs analyst Umang Choudhary initiated coverage of Chesapeake Energy Corporation (NASDAQ:CHK) with a Buy rating and $106 price target, which implies 53% total return. According to the analyst, the acquisition of Vine Energy in the Haynesville and Chief Oil and Gas in Appalachia increased the company’s scale in Appalachia/Haynesville with 15 years of attractive inventory. The analyst believes this can support free cash flow yields of 26%/24%/15% in 2022 through 2024, and believes that Chesapeake Energy Corporation (NASDAQ:CHK) is exposed to a long-term favorable gas macro outlook. The analyst thinks the stock will deliver attractive near-term capital returns.
Overall, 59 hedge funds reported owning a stake in Chesapeake Energy Corporation (NASDAQ:CHK) at the end of Q1 2022. This was in contrast to 50 hedge funds with $2.33 billion worth of positions in Chesapeake Energy Corporation (NYSE:CHK) at the end of Q4 2021. Howard Marks’ Oaktree Capital Management held roughly 11 million shares of the company valued at $957.1 million, making it the firm’s most prominent Q1 shareholder.
4. Devon Energy Corporation (NYSE:DVN)
Number Of Hedge Fund Holders: 66
Devon Energy Corporation (NYSE:DVN) is an energy company based in Oklahoma. The core business of the company is the exploration, development, and production of oil and hydrocarbon in the United States. As of 2022, the company has $1.6 billion barrels of oil equivalent reserves, 44% of which is petroleum and 29% is natural gas.
On July 19, Truist analyst Neal Dingmann raised the price target on Devon Energy Corporation (NYSE:DVN) to $115 from $103 and maintained a Buy rating on the shares as part of a broader research note previewing Q2 results in the E&P space. The recent downturn in commodities has taken some of the wind out of the group’s sails, but the tailwind “breeze remains brisk” as oil prices are currently at levels not seen since 2014 and up nearly 40% year-to-date, even though many oil names are nearly flat or down, the analyst tells investors in a research note.
According to Insider Monkey’s Q1 data, 66 hedge funds were long Devon Energy Corporation (NYSE:DVN) in the first quarter of 2022, up from 51 funds in the preceding quarter. The total stakes held in Q1 amounted to $1.92 billion, compared to $1.74 billion in the last quarter. Rajiv Jain’s GQG Partners is the company’s biggest shareholder, with a position worth roughly $888 million.
3. ConocoPhillips (NYSE:COP)
Number Of Hedge Fund Holders: 67
ConocoPhillips (NYSE:COP) is an American multinational corporation engaged in hydrocarbon exploration and production. The company produces, transports, and distributes crude oil, bitumen, natural gas, liquefied natural gas, and natural gas liquids worldwide. On July 14, the company entered into a heads of agreement (HOA) with Sempra to develop Sempra Infrastructure’s Port Arthur LNG project and jointly participate in other related energy infrastructure in Southeast Texas and the Pacific Coast of Mexico.
MKM Partners analyst Leo Mariani assumed coverage of ConocoPhillips (NYSE:COP) on July 20 with a Buy rating and $110 price target as part of a broader research note on Exploration & Production names. While the oil market has been quite tenuous of late, the analyst believes that WTI oil prices should stay above $100 as long as the war in Ukraine is ongoing. The analyst is also positive on the company’s “high returns of capital to shareholders, lower base production declines compared to peers, valuable international asset diversification and strong balance sheet.”
According to Insider Monkey’s data, 67 hedge funds were bullish on ConocoPhillips (NYSE:COP) at the end of Q1 2022, up from 56 funds in the earlier quarter. Ric Dillon’s Diamond Hill Capital is the leading shareholder of the company, with more than 7 million shares worth $702.5 million.
Here is what Diamond Hill Large Cap Fund has to say about ConocoPhillips (NYSE:COP) in its Q1 2022 investor letter:
“We redeployed capital into ConocoPhillips (NYSE:COP), which was trading at a discount to our estimate of intrinsic value and is well positioned over the long run due to its low-risk asset base.”
2. Occidental Petroleum Corporation (NYSE:OXY)
Number Of Hedge Fund Holders: 67
Occidental Petroleum Corporation (NYSE:OXY) is an American company engaged in hydrocarbon exploration in the United States, and the Middle East as well as petrochemical manufacturing in the United States, Canada, and Chile.
Earlier this June, Truist analyst Neal Dingmann raised his price target on Occidental Petroleum Corporation (NYSE:OXY) to a “Street high” $93 from $88 and kept a Buy rating on the shares, telling investors that he believes there is a “good chance” that shareholder Warren Buffett buys the remaining two-thirds of the company that he and Berkshire Hathaway do not already own once the company achieves an investment grade rating. Berkshire and Buffett’s purchase of additional Occidental shares in recent days leaves it owning about one-third of the company when its preferred ownership is factored.
In a regulatory filing, Occidental Petroleum Corporation (NYSE:OXY) disclosed that its major shareholder Berkshire Hathaway bought another 1.9 million shares of common stock in a total transaction size of $112.1 million on July 14th. Overall, 67 hedge funds are bullish on the shares of Occidental Petroleum Corporation (NYSE:OXY) as of Q1 2022.
Here is what Smead Capital Management had to say about Occidental Petroleum Corporation (NYSE:OXY) in its Q3 2021 investor letter:
“Oil stocks dominated our winners for the quarter. We showed that we have unlimited ability to tempt fate by buying into Occidental Petroleum (OXY) this year after it was our biggest loser of 2020. It gained 16.64% during the third quarter.”
1. Exxon Mobil Corporation (NYSE:XOM)
Number Of Hedge Fund Holders: 83
Exxon Mobil Corporation (NYSE:XOM) is an American multinational oil and gas corporation headquartered in Irving, Texas. It is the largest direct descendant of John D. Rockefeller’s Standard Oil, and was formed on November 30, 1999, by the merger of Exxon and Mobil. One of the most reliable dividend payers in the world, Exxon Mobil Corporation (NYSE:XOM) has recorded 39 years of consistent dividend increases. The stock has gained 41.06% since the beginning of 2022.
On July 19, Piper Sandler analyst Ryan Todd upgraded Exxon Mobil Corporation (NYSE:XOM) to Overweight from Neutral with a price target of $109, up from $102. According to the analyst, the setup for energy stocks heading into Q2 earnings reports looks increasingly attractive, and he remains constructive on Exxon Mobil Corporation (NYSE:XOM) based on its good downstream performance and believes its chemicals arm will show resilience.
As per Insider Monkey’s database for Q1, Exxon Mobil Corporation (NYSE:XOM) experienced growth in hedge fund positions, as 83 elite funds owned stakes in the company, up from 71 in the previous quarter. The consolidated value of these stakes is over $8.5 billion. Rajiv Jain’s GQG Partners is the company’s biggest shareholder, with a stake worth over $4.2 billion.
Saturna Capital mentioned Exxon Mobil Corporation (NYSE:XOM) in its Q4 2021 investor letter. Here is what the firm has to say:
“Few companies maintain their position at the top for more than a decade or two. One that did was Exxon, which appeared decennially from 1980 through 2010. In 2019 it was ranked 10th, but as of writing has dropped to 39th place.”
You can also take a peek at Analysts Just Turned Bullish on These 10 Stocks and 10 Cheap Dividend Stocks with Over 6% Yield.
