In this article we present the list of Louis Navellier is Buying These 10 Energy Stocks in 2022.
ConocoPhillips (NYSE:COP), Phillips 66 (NYSE:PSX), and Devon Energy Corporation (NYSE:DVN) represent some of the biggest purchases of energy stocks made by Louis Navellier’s Navellier & Associates during the first quarter of 2022.
Louis Navellier is the founder and chairman of Reno, Nevada-based money management firm Navellier & Associates. The fund employs a disciplined, bottom-up approach to selecting stocks that first measures their relative risk and reward profiles before delving into the most intriguing stocks’ fundamentals.
Navellier is a frequent contributor to business shows on CNBC, Fox News, and Bloomberg, and publishes multiple newsletters annually which share his investment philosophies and insights as they particularly relate to growth investing. Navellier received a B.S. in business administration from California State University in 1978, followed by an M.B.A. in finance in 1979.
Louis Navellier of Navellier & Associates
Navellier & Associates’ Large Cap Growth portfolio has been on a roll in recent years, returning 17.11% last year, 33.27% in 2020, and 32.71% in 2019. The first quarter of this year was a rough one for the portfolio however, as it lost 15.55%. That underperformance contributed to the value of Navellier’s 13F portfolio declining to $588 million by the end of Q1, down from $687 million at the end of 2021.
With that Q1 performance in mind, Navellier took several steps to change his fund’s fortunes during the first quarter, most notably investing heavily in energy stocks, which he had previously had minimal exposure to. The fund sold off 80 of its former long positions during the quarter, while adding 55 new holdings to its portfolio, cutting its exposure to healthcare and tech stocks, while building its exposure to energy and materials companies.
We’ll take a look at some of Navellier & Associates’ biggest energy purchases made during Q1 in this article.
Our Methodology
The following data is gathered from Navellier & Associates’ latest 13F filing with the SEC. We follow hedge funds like Navellier & Associates because Insider Monkey’s research has uncovered that their consensus stock picks can deliver outstanding returns.
All hedge fund data is based on the exclusive group of 900+ funds tracked by Insider Monkey that filed 13Fs for the Q1 2022 reporting period.
Louis Navellier is Buying These 10 Energy Stocks in 2022
10. Tenaris S.A. (NYSE:TS)
Value of Navellier & Associates‘ 13F Position: $1.83 million
Number of Hedge Fund Shareholders (as of March 31): 19
ConocoPhillips, Phillips 66 (NYSE:PSX), and Devon Energy Corporation are among the prominent energy stocks that Louis Navellier was buying during the first quarter. A less heralded energy name that also attracted his attention was Tenaris S.A. (NYSE:TS), as Navellier bought 60,875 shares of the company.
A supplier of steel pipes and other products and services for the energy industry, Tenaris S.A. is benefiting from the increased demand for its services that has resulted from the Ukraine conflict, as North American drilling activity picks up pace. The company earned an impressive $0.85 per share in Q1 thanks to better than expected pricing, and also beat revenue estimates, hauling in $2.37 billion.
Tenaris S.A. has been trading at a significant discount to some of its biggest oilfield services peers, which has mystified Piper Sandler analyst Ian Macpherson. The analyst has an ‘Overweight’ rating and $60 price target on TS shares, suggesting greater than 100% upside.
9. Chevron Corporation (NYSE:CVX)
Value of Navellier & Associates‘ 13F Position: $1.96 million
Number of Hedge Fund Shareholders (as of March 31): 56
Navellier hiked the size of its Chevron Corporation (NYSE:CVX) holding by 37% during the first quarter, building up a stake consisting of 12,007 shares. 56 hedge funds were long CVX on March 31, unchanged quarter-over-quarter.
Chevron Corporation shares have gained 39% in 2022 thanks to ballooning oil prices that have sent the company’s income and free cash flow soaring. Chevron pulled in $6.3 billion in net income during Q1, a 350% year-over-year increase, while its free cash flow hit $6.1 billion, approaching record territory.
Chevron Corporation was one of the top quarterly performers for the ClearBridge Investments Large Cap Value Strategy, which had this to say about the company and energy sector 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.”
8. TotalEnergies SE (NYSE:TTE)
Value of Navellier & Associates‘ 13F Position: $2.86 million
Number of Hedge Fund Shareholders (as of March 31): 20
Navellier & Associates added a new position in TotalEnergies SE (NYSE:TTE) to its 13F portfolio during Q1, buying 56,563 shares. Zach Schreiber’s Point State Capital was among the group of other hedge funds that also added TTE to their portfolios during the quarter.
TotalEnergies SE offers a compelling mix of oil, LNG, and renewables for investors. The global energy major, which is based in France, is making significant investments in clean energy, with plans for 100 gigawatts of renewable power generation by the end of the decade. The company has already won the rights to several projects this year that will result in the development of more than 5 gigawatts of offshore wind power.
TotalEnergies SE also boasts a solid dividend that currently yields 3.84%. The company impressed investors back in the early days of the pandemic with its commitment to maintaining its dividend, saying that as long as oil stayed above $40 per barrel, its dividend would not be touched. That was in sharp contrast to European peers like BP and Shell, which quickly slashed their own dividends.
7. BP plc (NYSE:BP)
Value of Navellier & Associates‘ 13F Position: $3 million
Number of Hedge Fund Shareholders (as of March 31): 27
The aforementioned BP plc (NYSE:BP) also landed on Louis Navellier’s buying list during Q1, as his fund took a new stake of 101,897 shares in the London, England-based oil and gas supermajor. Hedge fund ownership of BP is near all-time lows, with just 27 funds owning BP shares on March 31.
As with TotalEnergies, BP plc (NYSE:BP) has also sought to improve its image and develop a greater focus on renewables, even going so far as to try and drum up the new acronym-based nickname Beyond Petroleum. BP recently sold its 50% stake in the Sunrise project in Alberta’s oilsands, becoming the latest oil giant to divest assets in the region as it seeks to focus more investments on renewables like hydrogen. In return for its oilsands stake, BP acquired the rights to an unlaunched offshore drilling project off the coast of Newfoundland.
BP plc (NYSE:BP)’s net debt was lowered for the eighth consecutive quarter during Q1, falling to $27.5 billion thanks to the company generating $4.1 billion in surplus cash flow during the quarter. The company had earmarked $2.5 billion of that windfall towards executing share buybacks in the current quarter as part of its 2022 goal to allocate 60% of surplus cash flow towards buybacks.
6. Antero Resources Corp (NYSE:AR)
Value of Navellier & Associates‘ 13F Position: $3.23 million
Number of Hedge Fund Shareholders (as of March 31): 53
Closing out the first half of the list is Antero Resources Corp (NYSE:AR), which Navellier’s fund made a modest purchase of during Q1, hiking the size of its AR holding by 2% to 105,854 shares. The exploration and production company has exploded in popularity among hedge funds over the past six quarters, with ownership of the stock rising by 130% during that time.
As with BP, Antero Resources Corp has also earmarked a portion of its free cash flow towards share repurchases, with the current rate being 25% of FCF. Once the borrowings on its credit facility are repaid, which is anticipated to occur in the current quarter, the company plans to raise that rate to 50%. Antero expects to generate more than $2.5 billion in FCF in 2022 and expects to average about the same amount annually through 2026 (at current commodity prices).
Antero Resources Corp was just one of many energy stocks that Louis Navellier was buying during Q1. In the second part of this article we’ll analyze his purchases of ConocoPhillips, Phillips 66 (NYSE:PSX), and Devon Energy Corporation, among others.
5. Phillips 66 (NYSE:PSX)
Value of Navellier & Associates‘ 13F Position: $4.74 million
Number of Hedge Fund Shareholders (as of March 31): 43
Louis Navellier’s Navellier & Associates massively raised its stake in Phillips 66 (NYSE:PSX) during the first quarter, adding 1,424% more shares to its position to lift it to 54,856 total. Fellow hedge fund titans Cliff Asness and Stanley Druckenmiller also bought boatloads of PSX shares during the quarter.
Phillips 66 (NYSE:PSX) is largely known for its refining operations and higher gas prices are greatly improving the margins on its refining business, generating far more free cash flow for the company. Phillips plans to use that extra cash to pay down its debt, buy back more shares, and continue to raise its dividend, which already has a long history of solid growth.
Phillips 66 (NYSE:PSX)’s results were down across the board quarter-over-quarter during Q1, but the company still managed operating cash flow of $1.1 billion. Adjusted earnings came in at $1.32 per share, down by $703 million quarter-over-quarter. Phillips also had a $100 million quarterly swing in its hedges, losing $50 million in Q1 after gaining $50 million in Q4.
4. Devon Energy Corporation (NYSE:DVN)
Value of Navellier & Associates‘ 13F Position: $5.81 million
Number of Hedge Fund Shareholders (as of March 31): 66
Devon Energy Corporation is yet another energy stock that Louis Navellier was investing money into during Q1, building a new stake in the company that contained 98,333 shares. There was a 27% surge in hedge fund ownership of DVN during the first quarter.
Devon Energy Corporation made a move that’s been widely praised by investors when it acquired RimRock Oil and Gas’s leasehold interest and related assets in North Dakota’s Williston Basin for $865 million. It’s estimated that the deal will deliver a free cash flow yield of more than 25% over the next year at expected oil prices.
Devon Energy Corporation maintains one of the best balance sheets in the industry even following that cash transaction, and is also poised to return plenty of money to shareholders in the coming quarters through its fixed-plus variable dividend program. Its latest payments equated to an annualized dividend yield of 6.5%.
3. Marathon Oil Corporation (NYSE:MRO)
Value of Navellier & Associates‘ 13F Position: $5.96 million
Number of Hedge Fund Shareholders (as of March 31): 43
Marathon Oil Corporation (NYSE:MRO) didn’t attract as much hedge fund attention as Devon Energy did during Q1, but it certainly captured the imagination of Navellier, who added 237,193 shares of MRO to his fund’s 13F portfolio during the quarter.
Unlike Phillips 66 and many other oil companies, which limit their quarterly instability and uncertainty by locking in hedges on oil prices, Marathon Oil Corporation had little hedging activity, making it more sensitive and poised to benefit from this year’s rising prices.
Another interesting facet to the Marathon Oil Corporation story in 2022 is that the company is tax shielded this year following its substantial losses in past years. That means it will be able to return even more of its potentially sizable windfall this year to shareholders. Those tailwinds helped push MRO shares up by over 90% through June 7, though they’ve declined by 25% since then, opening up a more reasonable entry point for investors.
2. EOG Resources, Inc. (NYSE:EOG)
Value of Navellier & Associates‘ 13F Position: $8.56 million
Number of Hedge Fund Shareholders (as of March 31): 51
EOG Resources, Inc. (NYSE:EOG) was already a stalwart member of Louis Navellier’s 13F portfolio heading into 2022 and became even further entrenched after the money manager raised his position in the company by 151% during the first quarter. Yet while most energy stocks were gaining hedge fund ownership during Q1, EOG actually suffered a small 6% decline.
EOG Resources, Inc. is no different from the majority of other energy names on this list, as it’s currently awash in cash and set to make its shareholders very happy this year. In addition to its $0.75 quarterly dividend payments, EOG is also making special dividend payments that send some of its excess cash over to shareholders. Its latest such payment came in at $1.80 per share.
EOG Resources, Inc. is not only benefiting from the skyrocketing oil prices, but also from its own substantial operational improvements. EOG shuttered many of its underperforming wells at the height of the pandemic and the effect on the company’s operating margin has been tremendous. EOG has pushed its operating margin up by more than 900% from its pandemic low, hitting 43.15% on that front in the latest quarter.
1. ConocoPhillips (NYSE:COP)
Value of Navellier & Associates‘ 13F Position: $12.39 million
Number of Hedge Fund Shareholders (as of March 31): 68
Topping the list of Louis Navellier’s biggest energy buys of Q1 is ConocoPhillips, which now ranks as the fund manager’s third favorite stock. Navellier raised his stake in COP by 130% during the first quarter, lifting the size of his position to 123,931 shares.
ConocoPhillips is highly efficient when it comes to finding and producing oil and gas, which is the company’s specialty. It was one of the few energy companies that was free cash flow positive in 2020, and needless to say, it’s growing more prosperous by the day. Conoco grew its earnings by a tremendous 370% during the first quarter, thanks to its average realized oil price rising by 70% during that time to $76.99 per barrel.
ConocoPhillips has also adopted the fixed plus variable dividend payouts standard that numerous other energy companies are now utilizing. The company’s latest fixed quarterly dividend payment was $0.46, while its variable payment was $0.70. All told, those payments equated to an annualized dividend yield of nearly 5%.
For more on the latest trades made by some of the biggest hedge fund managers in the world, check out 10 Best Automation Stocks To Buy Now and Top 10 Stocks to Buy Today According to Kerr Neilson’s Platinum Asset Management.
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This article is originally published at Insider Monkey.
