3 Energy Stocks to Sell in September Before They Crash & Burn
Energy stocks are an essential addition to an investor’s diversified portfolio. They garner exposure to different market areas and may offer unique opportunities for significant returns. For example, while most stock market sectors struggled during 2022 when the world was getting back on track following the pandemic, the energy sector saw exponential growth. Oil prices rose, and other energy costs skyrocketed, translating into huge returns for shareholders of energy companies.
That said, you should avoid the energy companies mentioned below, as they represent the top energy stocks to sell. Investors should focus on holding stock in companies with a much better outlook for the future in hopes of receiving large returns.
Enviva (EVA)
Enviva (NYSE:EVA) operates as a sustainable wood bioenergy company. It is the world’s largest supplier of wood pellets, used to substitute coal for energy production. The company produces industrial wood pellets amongst 10 plants across Virginia, Florida, Mississippi, South Carolina, Georgia and North Carolina. Enviva sells its products to customers in the U.S. Japan and Europe. EVA is also constructing a facility in Alabama, which is expected to increase its production capacity by 18%.
Since September of last year, the share price for Enviva fell about 86%. Following its earnings release for the first quarter in May, the company’s share price fell 67% from $21.35 to $7.01. That was primarily due to the company eliminating its quarterly dividend to retain cash flow for company expenditures from 2023 to 2026.
On August 2, Enviva reported its second-quarter earnings for 2023. The numbers showed a 2% increase in net revenue and a net loss of $56 million — more than double the loss from 2022. On August 30, the company announced that effective immediately, Glenn Nunziata would take over the role of chief financial officer and executive vice president.
Vermilion Energy (VET)
Headquartered in Canada, Vermilion Energy (NYSE:VET) is an international energy producer focusing on acquiring and developing natural gas and petroleum sites in North America, Europe and Australia. VET also carries working interests in the Provinces of Alberta, Manitoba and British Columbia. It has a site in Wyoming too.
You can also find Vermilion in France, Germany, Netherlands, Slovakia, Hungary, Croatia and Ireland. The company also has a 100% working interest in Wandoo Field — located off Australia’s northwest coast.
Over the past year, VET fell 43%. On August 2, Vermilion Energy released its earnings results for the second quarter of 2023. Sales for natural gas and petroleum fell by 45%. Net income dropped by 65% compared to the second quarter of 2022. Vermilion repurchased $24 million in shares and reported a dividend of $0.10 per share — payable on October 16.
The numbers also showed petroleum production dropping 20% compared to last year, and natural gas liquids (NGLs) production fell by 19%. Its overall production of natural gas increased by 18% within the same time period.
Tellurian (TELL)
Tellurian (NYSE:TELL) is a natural gas company heavily focused on liquefied natural gas (LNG) and related infrastructure in Houston, Texas. The company has been constructing a new facility for liquefied natural gas production near Lake Charles, Louisiana. The project is expected to be five different plants, multiple storage tanks and berths — spaces to dock ships — and 20 trains for the facility. Phase one of the project will start with only two plants and should start production of LNG sometime in 2026 or 2027.
On May 10, Tellurian appointed Simon Oxley as the new executive vice president and chief financial officer. In early August, the company reported earnings for the second quarter of 2023. Its net loss expanded from $35 thousand in the second quarter of 2022 to $57 million in Q2 2023. That was partly due to the massive Driftwood LNG project near Lake Charles, Louisiana, I previously mentioned. The company also saw revenue cut in half compared to Q2 of 2022.
TELL shares have dropped 70% since September 2022. Its Driftwood LNG project may be an excellent financial decision for the company, but that won’t manifest until at least 2027. There is also a chance this venture won’t work out, which could leave investors in a terrible position.
As of this writing, Noah Bolton did not hold (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
