However, not all energy stocks perform equally well during the good times. While the best performers change yearly due to the sector’s volatility, some companies remain top contenders for maximizing returns over the long run.
This article highlights three energy stocks that are buy-rated and positioned to deliver strong growth and outsized gains for years. These companies have top-tier assets, are savvy and shareholder-friendly, and have notable catalysts that could surge share prices.
NextEra Energy Inc. (NEE)
The first energy stock on our list is NextEra Energy, Inc. (NYSE:NEE). The company functions as an electric utility provider and energy infrastructure operator through its owned subsidiaries including NextEra Energy Resources and NextEra Energy Transmission.
NextEra Energy Resources develops electric power generation plants that sell electricity on wholesale markets in the United States and Canada. Moreover, the company puts resources into clean power enterprises such as battery storage systems and renewable fuels. It also manages renewable energy developments like renewable natural gas units and landfill gas electricity generation sites.
After receiving regulatory antitrust clearance, NextEra Energy Partners has finalized the sale of its Texas natural gas pipeline assets to Kinder Morgan (NYSE:KMI) for $1.815 billion. The net proceeds from the transaction were $1.4 billion. NextEra Energy Partners plans to use the funds for equity acquisitions, including financing the purchases of STX Midstream and the convertible equity portfolio from NEP Renewables II.
NEE reported a third-quarter net income of $1.22 billion, down from $1.69 billion last year. However, on an adjusted basis, earnings were $1.920 billion compared to $1.683 billion in the same year-ago period. On the brighter side, NextEra reported adjusted EPS growth of 10.8% through the last three quarters, while its most recent EPS beat the consensus by 9.3%. Meanwhile, the company’s Florida Power & Light subsidiary net income increased to $1.18 billion from $1.07 billion.
NextEra declared its annual dividend at $1.87, representing a 3.06% yield. On top of that, analysts rate the company a “Strong Buy” with a high price target of $84, indicating over 37% upside potential for new investors.
ConocoPhillips (COP)
The next energy stock on our list is a global exploration and production company with operations across the energy value chain, ConocoPhillips (NYSE:COP). The company operates business segments focused on Alaska, the lower 48 United States, Canada, Europe, the Middle East, North Africa and Asia Pacific. ConocoPhillips explores for, produces, transports, and markets hydrocarbons, including crude oil, natural gas and natural gas liquids.
COP has recently approved the development of the Willow oil project in Alaska and estimates the project could generate between $8 billion and $17 billion in revenue over its operating life. According to the company, Willow is projected to produce about 600 million barrels of oil. The project aims to contribute to domestic energy production in the US.
ConocoPhillips reported strong financial results for the third quarter, with revenue increasing to $14.25 billion, up from $12.35 billion QoQ. Similarly, gross profit and net income grew to $6.71 billion and $2.80 billion, respectively, building on the second quarter’s $5.85 billion and $2.23 billion numbers. Cash flow generation also remained robust, generating $5.5 billion from operations. On a per-share basis, recent EPS beat consensus at $2.16, a 5.88% surprise to the upside. Meanwhile, analysts have a “Strong Buy” rating on the stock with high price targets of $173, indicating nearly 55% profit potential from current levels.
EOG Resources, Inc. (EOG)
The last (but not least) on our list of energy stocks to buy is an independent oil and gas exploration and production company, EOG Resources (NYSE:EOG). The company operates in the U.S. and has offshore operations in Trinidad, Oman, and other international locations. With a market cap of over $67 billion, EOG engages in upstream oil and gas activities, including exploration, development, production, and marketing of hydrocarbons. The company also conducts abandonment and reclamation projects in Canada.
EOG reported excellent third-quarter financial results. Revenue came in at $6.21 billion, an 11% increase QoQ. Similarly, net income rose to $2.030 billion, up 31% from the previous quarter. The company also generated $1.5 billion of free cash flow and repurchased shares worth $61 million during the quarter.
Meanwhile, EPS came in at $3.44, beating consensus by 16.61%. EOG also raised its regular quarterly dividend by 10% to $0.91 per share, reflecting a 3.07% yield. Looking ahead, analysts maintain a “Strong Buy” rating on the stock with a high price target of $172, representing over 48% upside potential from current levels.
On the date of publication, Rick Orford 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.
Rick Orford is a Wall Street Journal best-selling author, investor, influencer, and mentor. His work has appeared in the most authoritative publications, including Good Morning America, Washington Post, Yahoo Finance, MSN, Business Insider, NBC, FOX, CBS, and ABC News.