Energy stocks: the two bets that promise gains of over +40%
Energy stocks outperformed last yeargenerally gaining 59% in a year when the S&P 500 fell 19%.
This is a serious performance, one that always pleases investors, and which prompts traders and analysts to closely follow the energy sector in this first quarter of 2023.
in perspective, the price of oil is likely to increase by the end of the first quarter of 2023.
China is reopening its economy, which will drive up demand, while exports of Russia, which were hit by sanctions related to the invasion of Ukraine last year, have returned to almost pre-war levels.
Also the seasonal increase in demand in the United States, during the spring and summer, it will support prices, which will probably be reflected in share prices.
Against this backdrop, Wall Street analysts are looking at the energy sector, looking for stocks ready to earn, on the order of 40% or more. Here are two names to bet on.
Titoli energia in stile buy: TXO Energy Partners (TXO)
The former energy stock is new to the markets, the related company having only launched its IPO this year.
TXO Energy Partners operates as a limited partnership limited by shares, with operations in the Texas-New Mexico Basin and the San Juan Basin of New Mexico-Colorado.
The company focuses on profitable exploitation of conventional oil and gas fields in its main areas of activity.
TXO Energy Partners has a diversified portfolio of conventional businesses encompassing different types of hydrocarbon production methods.
The stock began trading on Wall Street on January 27.
With the IPO TXO Energy Partners sold 5 million shares of common stock; At the close on Feb. 6, the company announced that underwriters had exercised their option to purchase an additional 750,000 shares of common stock.
Collectively, the IPO raised $115 million in total gross proceeds. The current price of the stock is $23.74, an increase of 8% compared to the closing value of the first day.
Raymond James’ 5-star analyst John Freeman views the stock as a strong buy. Its price target, set at $34, indicates a one-year upside potential of around 43%.
Diamond Offshore Drilling (DO)
The second energy stock that we will analyze is related to another oil and gas drilling company, this time focused on the difficult sector of oceanic hydrocarbon drilling.
It’s about Diamond Offshorewhich operates a fleet of deepwater rigs, including semi-submersibles and dynamically positioned drill rigs.
Diamond Offshore suffered a lot during the pandemic ed entered bankruptcy proceedings in April 2020, in base al Chapter 11.
The company then completed the financial restructuring process for ufiled from Chapter 11 in April of 2021 and the stock resumed public trading in March 2022.
Analyst David Anderson, of British banking giant Barclays, took over Diamond’s cover and believes the company is well positioned to generate earnings going forward.
“After a transitional year in 2022, after exiting bankruptcy in April 2021, we expect DO to generate significant EBITDA growth over the 2023-2025 period, following a essentially break-even 2022. This year will be just the first step, then ramping up in 2024 and 2025, driven largely by five rigs off contract in 2024…presenting a good repricing opportunity,” Anderson wrote.
This generally optimistic stance leads Anderson to evaluate the security as Overweight (i.e. buy), with a price target of $21, implying robust upside potential of 79% over a one-year horizon.