Our estimates are based on past market performance, and past performance is not a guarantee of future performance. It’s delivering real cash flows, owns critical infrastructure, and holds stakes in other major growth stories. Higher demand and lower inventories should help the top-rated oil stocks outperform.
Buy, Sell, Or Hold Occidental Petroleum Stock?
- The Zacks Consensus Estimate for 2025 earnings for Transocean indicates 107.7% growth.
- The Norway-based company is a leader in exploration, production and refining of oil and gas.
- Brazil, which faced operational challenges and outages this year, is projected to add 210,000 barrels per day (kb/d) by 2025, reaching 3.7 mb/d as new capacity exceeding 800 kb/d comes online.
- A robust economy can support rising oil prices and oil producer profitability.
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Oil companies make money by extracting, refining, and selling oil and oil-based products like gasoline and plastics. The amount they earn depends on their size, how much oil they produce, and the current price of oil globally. This makes it the largest condensate producer and the third-largest natural gas producer in the country. It has relatively low debt, high-value assets and is rapidly growing its LNG capabilities. The company has grown its net income from about $200 million in 2016 to $2.3 billion in 2022 – that’s over 10x growth.
Top AI Energy Stocks to Buy and Hold Forever
Devon’s dividend strategy makes it an enticing option for income-focused investors. They can collect a steady base dividend that’s sustainable throughout the oil price cycle and have the potential to earn significant payments during periods of high prices. ConocoPhillips is one of the largest E&P-focused companies in the world.
The company’s diversification enables it to produce lots of low-cost oil and natural gas, which allows it to generate plenty of cash. Profits and losses can swing wildly based on small shifts in demand or moves by petrostates such as Saudi Arabia and Russia, whose interests can run counter to those of the public companies in the industry. Supply and demand imbalances can cause huge fluctuations in oil prices. We saw that in early 2022, after Russia’s invasion of Ukraine, which sent crude prices soaring into the triple digits for the first time in years. The current HF Sinclair is a diversified energy company that refines and sells products such as gasoline, jet fuel, renewable diesel, specialty petrochemicals and more. Like Valero, the refinery operations of DINO allow it to insulate itself from as much volatility as we’ve seen in firms that depend on the current market price of fossil fuels.
Investing in Top Oil Stocks
Conversely, companies often scale back investment when prices plummet, reducing exploration efforts and project delays. Overall, though, it’s important to remember that oil and natural gas stocks, like the companies they represent, will likely do better if energy prices are high. And their long-term outlook is deeply enmeshed with geopolitical, economic and regulatory factors beyond any one company’s control. Although it’s possible for investors to brave commodities markets and invest in oil and natural gas directly, buying equities in oil companies can be more approachable for everyday investors, and potentially less risky. As you may have noticed in the “best long-term oil investments” section, major oil companies have been responding to these trends by modifying their portfolios to include renewable assets.
Despite the dim near-term prospects of the industry, we will present a few stocks that you may want to consider for your portfolio. But it’s worth taking a look at the industry’s shareholder returns and current valuation first. Global energy companies face evolving climate policies and stricter ESG investing in energy requirements.
Trends Defining the Oil and Gas – Drilling Industry’s Future
If you’re looking to dive into energy investments, this guide to the 9 best oil stocks of 2025 breaks down exactly where to look. This cash flow should continue to protect ExxonMobil’s dividend and its status as a Dividend Achiever. Given the growth of renewables, many investors are choosing to avoid oil stocks entirely. However, ExxonMobil is making investments in lower-carbon fuel sources, including carbon capture and storage, as well as biofuels, which may enable it to continue supplying Best oil stock the economy with fuel for years to come.
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- Moreover, oil prices influence investment decisions across the oil and gas value chain.
- Williams operates natural gas pipelines and related infrastructure across North America.
- The amount they earn depends on their size, how much oil they produce, and the current price of oil globally.
- But, the oil and gas sector had been facing some tough challenges, including concerns about climate change, changing regulations, and market instability.
- Its dividends, while not as attractive as Enbridge, are more financially stable (lower payout ratio) and have a similar dividend pedigree – 22 consecutive years of dividend growth.
It has delivered a peer-leading dividend growth rate over the past decade. Chevron also plans to repurchase between $10 billion and $20 billion of shares each year. Its leverage ratio is comfortably below its target range, positioning the company to potentially repurchase shares at the high end of that range next year. Several factors will drive Chevron’s free cash flow higher next year. The company recently finished major expansion projects in Kazakhstan and the Gulf of Mexico (also known as the Gulf of America in the U.S.). Ongoing development of its Permian Basin position and the implementation of cost-saving initiatives should further add to cash flow.
Oil is a vital part of the Canadian economy, and the energy sector employs a sizeable portion of the total workforce. Energy Transfer expects to spend $5 billion in capital expenditures in 2025. It plans to undertake major expansions through 2027, including its Hugh Branson pipeline, Nederland Flexport NGL terminal, and several other NGL transportation and Permian processing plants. On the basis of the trailing 12-month enterprise value-to-EBITDA (EV/EBITDA), the industry is currently trading at 5.50X, significantly lower than the S&P 500’s 17.94X.
The investing information provided on this page is for educational purposes only. NerdWallet, Inc. does not offer advisory or brokerage services, nor does it recommend or advise investors to buy or sell particular stocks, securities or other investments. In order to find the best oil stocks to buy now, we started by screening the S&P 500’s oil & gas sector for Wall Street analysts’ top-rated names. As with others on our list, Total Energies is one of the oldest players in the oil industry and one of the supermajors. Founded in 1924, TTE is among Europe’s largest integrated energy companies, with 15,600 service stations across 65 countries.
This can be a benefit if you buy at the right time or if the company you’re investing in makes a significant discovery of natural resources. The oil industry is a mature sector with well-established global infrastructure and supply chains. Yet, despite this solid foundation and strong cash flows, it faces mounting pressure due to tightening environmental regulations and geo-politically fueled price volatility. Oil stocks, also known as equities, are a form of security that grants investors proportionate ownership in publicly traded companies that are in the oil and gas industry. With a healthy dividend yield, solid quarterly earnings, and future-facing initiatives, Shell is one of the best energy investments for long-term investors looking to hedge their oil exposure with adaptability. The world is slowly moving away from fossil fuels in favor of green alternatives, but that transition will take decades.