We recently published a list of 11 Best Crude Oil Stocks To Buy Right Now. In this article, we are going to take a look at where Shell plc (NYSE:SHEL) stands against other best crude oil stocks to buy right now.
Crude oil markets have seen extreme volatility over the past year, fueled by a variety of economic, geopolitical, and supply and demand factors. Prices fell at the end of 2023, when international demand faltered and supply remained strong from key regions, before rebounding in early 2024 as leading oil-producing countries implemented supply cuts to stabilize the market. Meanwhile, demand signals have been mixed — industrial activity in major economies has improved, but high interest rates and inflationary pressures have limited overall energy consumption. After the presidential elections in the US, the Trump 2.0 agenda appears to be driving cracks in the economic outlook, due to a plethora of initiatives such as tariffs, a fight with immigration, and significant cuts in government spending. Despite Republicans notoriously being pro-business and pro-carbon, as confirmed by an announced policy of encouraging energy exploration and production on Federal land and Outer Continental Shelf, the reaction of the stock market has been mixed, as many crude oil stocks have underperformed the broad market in the last couple of months.
The reluctance of the broad market to price in an acceleration in the crude oil space is likely due to expectations of lower oil prices, primarily driven by an uncertain economic and industrial outlook. A slowing economy generally consumes less oil, which coupled with an increasing supply should put downward pressure on prices. Optimism for the year ahead vanished and the outlook has become one of the gloomiest since the pandemic. Companies started to signal widespread concerns about the impact of government policies, ranging from spending cuts to tariffs and geopolitical developments. For instance, the US economic surprise index hit the lowest last week since September, while the business capex forecasts were abruptly cut at the beginning of the year. Small businesses reflect similar signals, by cutting their capex expectations (as per surveys), while consumers report deteriorating financial expectations going forward. All these developments don’t play out in favor of a strong economy in the following quarters.
Financial markets have reflected this turbulence, as energy stocks moved in tandem with the swings in oil prices, which retracted more than 10% since the inauguration day. While refiners and midstream companies have generally performed well due to resilient transportation and processing demand, exploration and production firms have faced challenges in securing new investments. Looking forward, macroeconomic and geopolitical factors will continue to shape the crude oil market. Geopolitical factors, particularly in key oil-producing regions, remain an ongoing concern – with the end of the Ukraine conflict becoming a reality, Russian oil will likely flow more freely abroad, putting even more downward pressure on global prices. Despite the aforementioned headwinds, there are also some positive takeaways for investors – while renewable energy investments continue to grow, the transition remains gradual, ensuring that crude oil will remain a critical component of the global energy mix in the future, especially under the carbon-friendly Trump 2.0 regime. Furthermore, with oil prices declining and many crude oil stocks being down from their mid-2024 highs, the current developments may turn out to be a great long-term buying opportunity.
Our Methodology
We used the Insider Monkey proprietary hedge fund holding database and identified the 11 most popular crude oil companies, ranked by the number of hedge funds that own the stock.
Why are we interested in the stocks that hedge funds pile into? 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 373.4% since May 2014, beating its benchmark by 218 percentage points (see more details here).
A gas refinery lit up against the night sky, showing the scale of the company’s petrochemical operations.
Shell plc (NYSE:SHEL)
Number of Hedge Fund Holders: 54
Shell plc (NYSE:SHEL) is one of the world’s largest integrated energy companies, with a dominant presence in the crude oil business. As a global powerhouse in oil and gas, SHEL engages in everything from exploration and production (upstream) to refining, distribution, and marketing (downstream). The company also has a global presence and significant operations in LNG and chemicals. While SHEL has been expanding into renewables and low-carbon solutions, crude oil remains a key driver of its revenue and profitability, with refining and trading operations optimizing margins amid fluctuating energy prices.
Shell plc (NYSE:SHEL) delivered a strong performance in 2024, achieving the second-highest cash flow from operations in its history and adjusted earnings of $23.7 billion. The company made significant progress on cost reduction, achieving $3.1 billion in structural cost savings one year ahead of schedule. Capital expenditure was disciplined, coming in below guidance at $21.1 billion for 2024. SHEL demonstrated strong shareholder returns, distributing more than $22.5 billion to shareholders in 2024, primarily through buybacks. Operationally, the company brought significant projects online, including Whale and Mero-3 in Deepwater, delivering over 80% of its targeted 500,000 barrels of oil equivalent per day of peak production ahead of schedule. The company also strengthened its integrated gas portfolio through the Pavilion acquisition and entry into the Ruwais LNG project in Abu Dhabi.
Looking forward, Shell plc (NYSE:SHEL) plans to host its Capital Markets Day in New York on March 25th, where it will outline the next steps of its journey – worth keeping an eye on this event. The company expects its 2025 capital expenditure range to be lower than its 2024 range, with more specific guidance to be provided at the upcoming Capital Markets Day. SHEL continues to focus on delivering more value with less emissions, maintaining its commitment to its carbon targets while emphasizing that progress may not always be linear. All in all, while macro will have a strong impact on the future results, the company itself is well-positioned and stronger than ever.
Overall, SHEL ranks 11th on our list of best crude oil stocks to buy right now. While we acknowledge the potential of SHEL 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 SHEL 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.