Q3’s Rising Stars: 3 Energy Stocks for Your Must-Watch List
The United States’ switch from fossil fuels to green energy has been a hot-button issue for years. However, how fast those changes are implemented will depend on the government’s policies. In the U.S., the future of energy policy has proven to be quite divisive. As such, the upcoming election could see a major shift in the U.S. energy policy. Trump has promised to roll back most green policies enacted under Biden. Meanwhile, the Democrats vow to push through major shifts in U.S. national policy. All of these changes could significantly impact certain energy stocks to watch out for.
No matter which side of the divide you fall on, investing in these energy stocks is an opportunity for significant returns. Considering possible U.S. energy policy changes after November 2024, these three energy stocks show the most promise in returns. Let’s examine why they will likely give investors considerable returns in the next few months.
Quanta Services (PWR)
Quanta Services (NYSE:PWR) is an infrastructure services company that serves the energy industry and other sectors, such as the communications industry. This is one of the safest energy stocks to invest in, no matter which side wins the upcoming U.S. election.
This stems from the fact that the U.S. power grid will undergo major upgrades in the next few years. In May 2024, the Biden administration launched a plan for the upgrades. Companies like Quanta Services will be called upon to implement this plan.
With its expertise in natural gas pipelines, the company could also benefit from the increased market share of clean natural gas. Investors agree with this sentiment, and since the start of 2024, they have pushed the price of PWR shares up over 22%. Analysts are also optimistic about the stock’s future, giving it an average price forecast of $285.17, an increase of over 14%.
In its first quarter fiscal 2024 results, released in May 2024, Quanta reported revenue of $5.03 billion, a 13.544% year-over-year rise. Meanwhile, net income rose to $118.4 million this quarter, a huge increase from the net income of $95 million the previous year’s quarter.
The company has also been consolidating its market share. In July, it announced that it had acquired Cupertino Electric. Cupertino, which specializes in infrastructure for the renewable energy sector, will help Quanta expand its footprint in this growing industry of energy stocks to watch.
Cheniere Energy (LNG)
Cheniere Energy (NYSE:LNG) is a natural gas production company with operations in the U.S. It made history as being the first company to export natural gas from the U.S. As fracking has become increasingly popular in the U.S., Cheniere Energy has been at the forefront of this revolution.
With fracking, the U.S. has become a top natural gas exporter globally. This has also made natural gas the preferred energy source for utilities, which have abandoned the costlier coal. With U.S. natural gas now cheaper than that produced in Asia and Europe, natural gas exporters have been working hard to increase their market share.
Natural gas is easy to export when it is liquid. However, massive infrastructure is required to do that. With operations in Texas and Louisiana, Cheniere Energy is one of the biggest natural gas liquefiers worldwide and is looking for expansion opportunities elsewhere.
The company’s only obstacle is the Biden administration’s pause in liquid natural gas exports to countries without a free trade agreement with the U.S. Once lifted, this pause could send LNG stock skyrocketing.
In its first-quarter results for fiscal 2024, Cheniere Energy reported revenue of $4.3 billion and a net income of $502 million. Revenue and net income fell 42% and 91%, respectively, during the quarter. However, once the pause on natural gas exports is lifted, LNG stock could experience a major surge in price.
Analysts remain cautiously optimistic about its future, giving LNG stock an average price forecast of $200.94, a roughly 14% increase.
Devon Energy (DVN)
Devon Energy (NYSE:DVN) is a hydrocarbon exploration company in the U.S. that also focuses on natural gas liquids, natural gas, and oil production. All its operations are in the U.S. in the Anadarko Basin, the Delaware Basin, and the Powder River Basin.
In July, Devon Energy announced the strategic $5 billion acquisition of Grayson Mill Energy’s business in the Williston Basin. The acquisition will increase its net asset value while increasing investors’ earnings.
In the first quarter fiscal 2024 results, Devon Energy reported that daily production averaged 664,000 barrels, exceeding estimates by 4%. It also reported that its production in the Delaware Basin increased 5% year over year, which aligns with its guidance.
The company ended the first quarter with $1.7 billion in operating cash flow, while free cash flow was $844 million. It also announced a stronger balance sheet, with a cash balance up $274 million to $1.1 billion.
Management’s recent moves make Devon one of the best energy stocks to watch in the third quarter of 2024. The upcoming U.S. elections could also lead to a positive outcome for the stock. With Trump promising to ramp up oil and gas production, Devon Energy could be one of the top beneficiaries.
On the date of publication, Joel Lim did not have (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.
On the date of publication, the responsible editor did not have (either directly or
indirectly) any positions in the securities mentioned in this article.
