3 Stocks to Watch as Energy Prices Surge Higher in 2022

U.S. oil prices surged above $81 a barrel for the first time in two months yesterday. The surge in demand for energy due to the reopening of the economy and supply disruptions due to unfavorable weather conditions are driving the prices of energy commodities higher. The supply limitation of the major oil-producing countries also contributes to the surging oil prices.

According to the U.S. Energy Information Administration (EIA), the U.S. retail electricity price for the domestic sector is expected to increase 4% year-over-year in 2022. Also, the EIA revised up its 2022 forecast for global crude oil prices by more than 7% from its previous estimate.

Given this backdrop, it could be wise to add prominent energy stocks Occidental Petroleum Corporation (OXY), Continental Resources, Inc. (CLR), and National Fuel Gas Company (NFG) to your portfolio.

Occidental Petroleum Corporation (OXY)

OXY produces energy and essential oil and gas products in the United States, the Middle East, Africa, and Latin America. The company operates through three segments - Oil and Gas; Chemical; and Marketing and Midstream. Through its segments, OXY explores, develops, and produces oil and condensate, natural gas liquids (NGL), and natural gas; manufactures and markets basic chemicals and vinyls; and purchases, markets, processes, transports, and stores oil, condensate, NGL, natural gas, carbon dioxide (CO2), and power. 

In November, OXY selected Worley while partnering with Carbon Engineering and Huron on the AIR TO FUELS project to produce renewable fuels in British Columbia by capturing carbon dioxide from the atmosphere. OXY believes that by selecting Worley, OXY should advance in the development of the AIR To Fuels facility.

OXY’s total Oil & Gas came in at $1.47 billion in the third quarter ended September 30, 2021. The company’s income under the chemical segment increased 128.7% year-over-year to $407 million. Also, the company’s net income amounted to $828 million during the period.

Analysts expect OXY's revenue for the fiscal year 2022 to be $26.66 billion, representing a 3.8% growth year-over-year. The company has an impressive earnings surprise history; it beat the consensus EPS estimates in three of the trailing four quarters. Also, its EPS is expected to grow 155% in fiscal 2021 and 34.9% in fiscal 2022. Its stock price has increased 41.1% over the past nine months.

OXY's strong fundamentals are reflected in its POWR Ratings. The stock has an overall B rating, which equates to a Buy in our proprietary rating system. The POWR Ratings assess stocks by 118 different factors, each with its own weighting.

Also, the stock has an A grade for Momentum and a B grade for Growth and Quality. We've also graded OXY for Sentiment, Value, and Stability. Click here to access all of OXY's ratings. OXY is ranked #11 of 77 stocks in the B-rated Energy – Oil & Gas industry.

Continental Resources, Inc. (CLR)

CLR is an independent oil producer in the north, south, and east regions of the United States. The company’s principal business is crude oil and natural gas exploration, development, and production. As of December 31, 2020, its proved reserves were 1,104 million barrels of crude oil equivalent (MMBoe) with proved developed reserves of 627 MMBoe.

During the third quarter ended September 30, 2021, CLR’s total revenues increased 93.7% year-over-year to $1.34 billion. The company’s income from operations came in at $545.71 million, compared to a loss from operations of $31.9 million in the prior-year quarter. Its net income amounted to $370.52 million, compared to a net loss of $81.58 million in the year-ago quarter. Also, the company’s EPS came in at $1.01, compared to a loss per share of $0.22 in the third quarter of 2020.

CLR's revenue is expected to increase 26.6% year-over-year to $6.97 billion in fiscal 2022. Its EPS is expected to increase 484.6% in fiscal 2021 and 35.8% in fiscal 2022. The stock has gained 165.4% over the past year.

CLR's POWR Ratings reflect this promising outlook. The stock has an overall B rating, which equates to a Buy in our proprietary rating system. Also, the stock has an A grade for Quality and Momentum.

In addition to the POWR Rating grades I've just highlighted, one can see CLR's ratings for Growth, Value, Sentiment, and Stability here. The stock is ranked #9 in the same industry.

National Fuel Gas Company (NFG)

Incorporated in 1902, NFG is a diversified energy organization primarily engaged in the production, transportation, distribution, and marketing of natural gas. The company operates through four segments - Exploration and Production; Pipeline and Storage; Gathering; and Utility. As of September 30, 2021, the company also owned approximately 95,000 acres of timber property; and managed about 2,500 additional acres of timber cutting rights.

NFG’s earnings for the third quarter ended September 30, 2021, came in at $86.96 million. The company’s EPS amounted to $0.95, compared to a loss per share of $1.6 in the prior-year quarter.

NFG's revenue for the fiscal year 2022 is expected to be $2.26 billion, representing a 29.7% year-over-year growth. The company has surpassed the consensus EPS in each of the trailing four quarters. Its EPS is expected to increase at 18.2% in fiscal 2021 and 8.7% next year. The stock has surged 48.5% over the past year.

It's no surprise that NFG has an overall B rating, which equates to a Buy in our POWR Rating system. Also, the stock has a B grade for Growth and Quality.

Click here to see the additional POWR Ratings for NFG (Sentiment, Stability, Momentum, and Value). NFG is ranked #5 in the same industry.

OXY shares were trading at $34.65 per share on Wednesday afternoon, down $0.05 (-0.14%). Year-to-date, OXY has gained 19.52%, versus a -0.91% rise in the benchmark S&P 500 index during the same period.

Priyanka is a passionate investment analyst and financial journalist. After earning a master's degree in economics, her interest in financial markets motivated her to begin her career in investment research.

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