In this article, we discuss the 5 oil and gas stocks to buy according to Ray Dalio. If you want to read the detailed analysis of Ray Dalio’s investment portfolio and investment philosophy, go directly to 10 Oil and Gas Stocks to Buy According to Ray Dalio.
5. Cenovus Energy Inc. (NYSE:CVE)
Number of Hedge Fund Holders: 42
Cenovus Energy Inc. (NYSE:CVE) is a Canadian integrated oil and gas company, focusing primarily on oil sands assets. As of August 18, the company stock has climbed 47.74% on a year-to-date basis.
Cenovus Energy Inc. (NYSE:CVE) reached an agreement to buy BP p.l.c. (NYSE:BP)’s 50% interest in BP-Husky Toledo Refinery in early August. The company has already owned 50% of the refinery since 2021. Cenovus Energy Inc. (NYSE:CVE) is expected to assume the operations of the refinery by the end of 2022 after the closing of the transaction, which is considered to be $300 million in cash subject to customary closing adjustments and the value of inventory at that time. Upon the closing of the transaction, the company’s total refining capacity will increase to 740,000 bbls/d.
According to the Insider Monkey database, 42 hedge funds had long positions in Cenovus Energy Inc. (NYSE:CVE), with a combined stake value of $2.9 billion at the end of the second quarter of 2022. In the previous quarter, 44 hedge funds held bullish positions in the company, collectively valued at $2.39 billion. In Q2, Bridgewater Associates increased its hold on the company by 254% to $37.38 million, representing 0.15% of the fund’s portfolio.
Here is what L1 Capital said about Cenovus Energy Inc. (NYSE:CVE) in its fourth-quarter 2021 investor letter:
“Detailed, bottom-up stock research remains the investment team’s primary focus and the core driver of portfolio performance. 2021 once again demonstrated the team’s ability to identify ‘winners’ through extensive company and industry research across a diverse range of sectors. Key contributors included Cenovus Energy, (due to) recovering oil price leading to improved investor sentiment, consensus earnings upgrades and strong free cash flow generation.”
4. Schlumberger Limited (NYSE:SLB)
Number of Hedge Fund Holders:64
Schlumberger Limited (NYSE:SLB) is an oilfield service and equipment company. It is the world’s largest offshore drilling company. The company has a 0.16% concentration in Bridgewater Associates’ portfolio with 1.086 billion shares worth $32.85 billion. The fund made 171% of additional purchases of Schlumberger Limited (NYSE:SLB) in the second quarter.
On July 22, Schlumberger Limited (NYSE:SLB) posted its Q2 2022 results and raised its guidance. The company recorded an EPS of $0.50, compared to the $0.40 consensus. Furthermore, the company reported a 20.2% revenue growth on a YoY basis to $6.77 billion, outperforming the estimates by $490 million. The company expects full-year revenue of at least $27 billion for 2022, while the consensus stands at $26.2 billion and sees a 200 bps increase in adjusted EBITDA margins at the end of the fourth quarter.
The day Schlumberger Limited (NYSE:SLB) posted its Q2 earnings reports, the company also declared a quarterly dividend of $0.175 per share payable on October 13 for shareholders of record on September 7. As of August 18, the company has a dividend yield of 1.97%.
3. ConocoPhillips (NYSE:COP)
Number of Hedge Fund Holders: 71
ConocoPhillips (NYSE:COP) is an American hydrocarbon exploration company with operations in around 15 countries. As of the second quarter of 2022, 71 hedge funds had a stake in the company, compared to 67 in the previous quarter. Bridgewater Associates increased its stake by 196% in the second quarter of 2022, bringing the total position to $97.6 million, representing 0.41% of the firm’s portfolio.
On August 4, ConocoPhillips (NYSE:COP) declared a $0.46 per share quarterly dividend, payable on September 1 to shareholders of record on August 16. The company also announced a fourth-quarter VROC of $1.46, to be paid out on October 14. As of August 18, ConocoPhillips (NYSE:COP) has a dividend yield of 1.84%.
In the second quarter of 2022, ConocoPhillips (NYSE:COP) made shareholder returns of $3.3 billion, which included $1 billion in ordinary dividends and VROC and $2.3 billion in stock repurchases. Additionally, the company is expecting to make a $5 billion increase in return of capital to shareholders by the end of 2022.
On August 18, Mizuho analyst Vincent Lovaglio reiterated a Buy rating on ConocoPhillips (NYSE:COP)’s shares. However, the analyst lowered his price target to $138 from $148.
Here is what Diamond Hill Capital had 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. Chevron Corporation (NYSE:CVX)
Number of Hedge Fund Holders: 59
Chevron Corporation (NYSE:CVX) is an energy company that is involved in hydrocarbon exploration, oil and gas production, refining, marketing, and transport. Ray Dalio’s investment portfolio increased its holding in the company by 64% to 711,243 shares in Q2, valued at $102.97 million, accounting for 0.43% of the firm’s portfolio.
On June 29, Chevron Corporation (NYSE:CVX) posted impressive second-quarter results, with an EPS of $5.82, exceeding the forecasts by $0.79. The revenues were up 82.9% on a YoY basis to $68.76 billion, outperforming estimates by a staggering $11.07 billion. Furthermore, the cash flow from operations was recorded at $13.8 billion and the company generated a free cash flow of $10.6 billion during the quarter.
On August 15, Cowen analyst Charles Ryhee maintained an Outperform rating on Chevron Corporation (NYSE:CVX)’s shares and raised his price target to $120 from $119. Ryhee remains positive about the company and noted that the price target revision was made in the light of raised Q2 2022 guidance from the management.
Here is what ClearBridge Investments had to say about Chevron Corporation (NYSE:CVX) in its Q1 2022 investor letter:
“The energy sector, which led a strong market in 2021, generated even more dramatic relative performance in the quarter, advancing 39% and leading the benchmark Russell 1000 Value Index. Years of restrained investment in the energy sector, combined with a strong post-pandemic recovery, contributed to the higher commodity prices. The upward pressure escalated with the Russian invasion of Ukraine. Our energy holding Chevron (NYSE:CVX) benefited from higher commodity prices and was among the top contributors to first-quarter performance.”
1. Exxon Mobil Corporation (NYSE:XOM)
Number of Hedge Fund Holders: 72
Exxon Mobil Corporation (NYSE:XOM) is a Texas-based oil and gas company. At the end of Q2 2022, Bridgewater Associates held 1.9 million shares of the company, worth $163.48 million, representing 0.69% of the fund’s portfolio. Bridgewater increased its position in Exxon Mobil Corporation (NYSE:XOM) by 67% in Q2 2022.
In the first half of 2022, Exxon Mobil Corporation (NYSE:XOM) generated a free cash flow of $27.0 billion, and its payout obligations summed up to $7.6 billion. Furthermore, the company repurchased stocks worth $6 billion and is aiming towards buying back $30 billion in common stock by the end of December 2023.
Exxon Mobil Corporation (NYSE:XOM) has worked towards improving its balance sheet in recent years. Including its short-term debt, the company had a net debt load of $63.8 billion at the end of 2020, which was brought down to $28.0 billion by June 30, 2022.
Saturna Capital mentioned Exxon Mobil Corporation (NYSE:XOM) in its fourth-quarter 2021 investor letter. Here is what the firm said:
“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 look at 10 Stocks To Buy According to William Von Mueffling’s Cantillon Capital Management and 10 Important Energy Stocks Making Moves After Earnings.
