We recently compiled a list of the 10 High Growth Energy Stocks To Invest In. In this article, we are going to take a look at where Northern Oil and Gas, Inc. (NYSE:NOG) stands against the other high-growth energy stocks.
Investments in the Energy Sector Expected to Rise Amid Growing Demand?
The global energy industry is undergoing significant transformation, driven by the urgent need to address climate change and the increasing demand for cleaner energy sources. This sector is crucial not only for powering economies but also for ensuring energy security and sustainability. According to Infosys Limited, global investments in power generation are projected to reach approximately $3 trillion in 2024, with $2 trillion of that allocated to clean energy initiatives. This shift reflects a broader trend towards renewable sources such as solar and wind, which are becoming more competitive with traditional fossil fuels.
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Despite the push for clean energy, the oil and gas sector remains vital for energy security and economic stability. Companies are focusing on optimizing their portfolios and improving operational efficiencies. On December 16, Reuters reported oil and gas companies in Norway expect to make a record investment of NOK 275 billion ($24.68 billion) in 2025, according to a recent report by the Offshore Norge industry association. This marks an increase from NOK 263.7 billion this year and surpasses earlier forecasts. A year ago, the association had estimated investments for 2024 and 2025 would total NOK 240 billion and NOK 225.9 billion, respectively. The rise in investment is attributed to factors such as inflation, faster development timelines, and expanded project scopes, including additional drilling at existing sites.
In 2025, companies plan to drill 45 exploration wells in Norwegian waters, up from 41 this year, marking the highest level of activity since 2019. Norway is the largest oil and gas producer in Western Europe, with production exceeding 4 million barrels of oil equivalent per day. The outlook for investments indicates a gradual decline after 2025, with projections of NOK 251 billion in 2026 and NOK 203 billion by 2029 as current projects reach completion. This forecast is based on insights from 14 major companies that account for nearly all of Norway’s oil and gas output.
According to the Global Energy Perspective 2024 report by McKinsey & Company, global energy demand is projected to increase by 11% to 18% by 2050, mainly driven by emerging economies. These regions are experiencing population growth and a rising middle class, which leads to higher energy needs. Additionally, as manufacturing industries move from developed to developing countries, the demand for energy in these areas is expected to rise further.
Despite advancements in renewable energy sources, the transition to cleaner energy has been slower than anticipated. Key technologies are still not fully developed or cost-effective, meaning that renewables alone may not meet future energy demands. As a result, fossil fuels, including oil, natural gas, and coal, are projected to meet between 40% to 60% of global energy demand by 2050, down from 78% in 2023. Investment in fossil fuels is expected to persist for at least the next decade to keep pace with growing energy needs.
The future of the energy sector may depend on how effectively energy companies can adapt to changing market dynamics and invest in innovative technologies while meeting the growing demand for energy.
Methodology
To compile our list of the 10 high-growth energy stocks to invest in, we used stock screeners from Finviz and Yahoo Finance. We sorted our results based on market capitalization and picked the largest energy companies by market cap. We also consulted various online resources and reviewed our own rankings. This exercise provided us with a list of more than 60 energy stocks.
To narrow down our list to high-growth energy stocks, we focused on companies with a compound annual growth rate (CAGR) in net revenue exceeding 20% over the past 5 years. Finally, from this list of high-growth stocks that met our criteria, we focused on the top 10 stocks most favored by institutional investors. Data for the hedge fund sentiment surrounding each stock was taken from Insider Monkey’s Q3 2024 database of 900 elite hedge funds. The 10 high-growth energy stocks to invest in are ranked in ascending order based on the number of hedge funds holding stakes in them as of Q3 2024.
Why do we care about what hedge funds do? The reason is simple: our research has shown that we can outperform the market by imitating the top stock picks of the best hedge funds. Our quarterly newsletter’s strategy selects 14 small-cap and large-cap stocks every quarter and has returned 275% since May 2014, beating its benchmark by 150 percentage points (see more details here).
An aerial view of an oil and gas platform in the middle of the ocean, representing the massive resources harvested by the company.
Northern Oil and Gas, Inc. (NYSE:NOG)
5-Year Revenue CAGR: 30.06%
Number of Hedge Fund Holders: 26
Northern Oil and Gas, Inc. (NYSE:NOG) is an energy company focused on acquiring, exploring, and producing oil and natural gas properties in the United States. The company operates primarily in the Williston, Uinta, Permian, and Appalachian basins. Northern Oil and Gas, Inc. (NYSE:NOG) is one of the best high-growth energy stocks to invest in.
In September 2024, the company successfully completed the acquisition of Delaware Basin assets from Point Energy Partners, LLC. This acquisition was made in partnership with Vital Energy, which will operate most of the assets. The deal includes a multi-year development plan that positions Northern Oil and Gas, Inc. (NYSE:NOG) for future growth. Following this, in October 2024, the company closed another significant acquisition of Uinta Basin assets from XCL Resources, LLC. This transaction adds approximately 15,800 net acres and over a decade of Tier 1 inventory to NOG’s portfolio. Northern Oil and Gas, Inc. (NYSE:NOG) jointly acquired the assets with SM Energy, Inc., which will operate substantially all the assets.
During the third quarter of 2024, Northern Oil and Gas, Inc. (NYSE:NOG) achieved record production levels of 121,815 barrels of oil equivalent per day, with oil comprising 58% of this total. This marks a 19% increase compared to the same quarter in 2023. The company also generated $177.1 million in free cash flow, up 32% from Q2 2024.
Northern Oil and Gas, Inc. (NYSE:NOG) has demonstrated a strong commitment to returning value to its shareholders, having returned approximately 50% of its free cash flow through dividends and share repurchases year-to-date. With a solid strategy focused on strategic acquisitions and operational efficiency, NOG is well-positioned for continued growth.
Overall NOG ranks 9th on our list of the high-growth energy stocks to invest in. While we acknowledge the potential of NOG as an investment, our conviction lies in the belief that AI stocks hold greater promise for delivering higher returns, and doing so within a shorter time frame. If you are looking for an AI stock that is more promising than NOG but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
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Disclosure: None. This article is originally published at Insider Monkey.
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