Energy continues to be the best-performing sector so far this year, despite several macroeconomic and geopolitical headwinds. Following Russia’s invasion of…
Ukraine in February, oil and gas prices jumped in the first quarter of 2022 on high demand and deepening supply chain issues exacerbated by Western sanctions on Russia. The surging prices have boosted the profits and share prices of major energy companies.
Furthermore, as the supply crunch continues, oil and gas prices are expected to soar in the near term. On Tuesday, gasoline prices hit a new record-high of $4.37, which was a fraction higher than the all-time high of $4.33 hit on March 11. Last week, crude oil was trading near $100 per barrel and is now proceeding toward $110. The bullish sentiment surrounding the energy sector is evident in Energy Select Sector SPDR ETF’s (XLE) 43.1% gains over the past year.
Given the bright growth prospects, we think it could be profitable to invest in fundamentally sound under-the-radar energy stocks like Imperial Oil Limited (IMO), Repsol, S.A. (REPYY), and Tenaris S.A. (TS).
Imperial Oil Limited (IMO)
Headquartered in Calgary, Canada IMO explores for, produces, and sells crude oil, synthetic oil, and natural gas in Canada. The company operates through three segments: Upstream; Downstream; and Chemical. Its Upstream segment has 386 million oil-equivalent barrels of proved underdeveloped reserves. It also sells petroleum products to industrial and transportation customers. Its Chemical segment manufactures various petrochemicals, benzene and aliphatic solvents, and plasticizer intermediates.
Last month, IMO declared a 34 cent quarterly dividend per share on its outstanding common shares, which is payable on July 1 to shareholders. The quarterly dividend declaration reflects the company’s strong financial performance and ability to deliver the value of its earnings to shareholders.
IMO’s total revenues and other income increased 81.3% year-over-year to CAD12.69 billion ($9.75 billion) in its fiscal year 2022 first quarter, ended March 31, 2022. Its income before income taxes improved 199.6% year-over-year to CAD1.53 billion ($1.18 billion). The company’s net income and net income per common share came in at CAD 1.17 billion ($899.16 million) and CAD 1.75, respectively, registering an increase of 199.2% and 230.2% from the year-ago value. In addition, its cash inflow from operating activities grew 83.2% year-over-year to CAD1.91 billion ($1.47 billion).
Analysts expect IMO’s EPS to grow 348.5% in price year-over-year to $1.80 for its fiscal 2022 second quarter, ending June 30, 2022. The $11.63 billion consensus revenue estimate for the current quarter represents an 80.4% rise from the prior year. The stock has gained 32% in price year-to-date and 55.7% over the past year. It closed yesterday’s trading session at $48.29.
IMO’s POWR Ratings reflect this promising outlook. It has an overall B grade, which equates to Buy in our proprietary rating system. The POWR Ratings assess stocks by 118 distinct factors, each with its own weighting.
IMO has a grade of A for Momentum and B for Growth and Quality. Within the A-rated Foreign Oil & Gas industry, it is ranked #25 of 42 stocks.
To see additional POWR Ratings (Value, Stability, and Sentiment) for IMO, click here.
Repsol, S.A. (REPYY)
REPYY is an integrated energy company that is headquartered in Madrid, Spain. The company operates through three segments: Exploration and Production; Industrial; and Commercial and Renewables. It explores for, develops, and produces crude oil and natural gas reserves and sells and transports crude oil and oil products, natural gas, and liquified natural gas (LNG). In addition, it engages in low-carbon power generation and renewable sources.
On May 9, REPYY implemented a share capital reduction through the redemption of treasury shares. REPYY’s share capital has been reduced to€75 million ($57.6 million) through the redemption of 75,000,000 treasury shares with a par value of €1 ($0.77) each. This move is expected to contribute to…
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