The OPEC+ group has imposed deep-set cuts to oil output, seeking to provide “security [and] stability to the energy markets.” Given the existing energy supply constraints, this move should…
serve as a tailwind for oil prices in the near term.
International Energy Agency (IEA) Executive Director Fatih Birol believes the cuts to be “risky” as the organization still expects a global oil demand growth of close to 2 million bpd this year.
Moreover, the energy sector seems to enjoy significant investor attention. The Energy Select Sector SPDR Fund (XLE) is up 57.5% year-to-date, compared to the 19% decline of the SPDR S&P 500 ETF Trust (SPY) over the same period.
Given this backdrop, some fundamentally strong oil and gas stocks, Marathon Petroleum Corporation (MPC), Valero Energy Corporation (VLO), and APA Corporation (APA), might be solid additions to one’s portfolio.
Marathon Petroleum Corporation (MPC)
MPC operates as an integrated downstream energy company. The company operates through its two segments: Refining & Marketing, which refines crude oil and other feedstocks; and Midstream, which transports, stores, distributes, and markets crude oil and refined products.
MPC’s team turbine optimization project at its Robinson, Illinois refinery recently received recognition from the U.S. Environmental Protection Agency (EPA). This project’s reduction of the refinery’s purchased electricity demand is expected to avoid almost 2,500 metric tons of carbon dioxide-equivalent emissions annually.
On September 21, it was announced that MPC had closed its joint venture with Neste Oyj (NTOIY) for the Martinez renewables project. This project underscores MPC’s commitment to providing low carbon-intensity feedstocks and is expected to create a platform for additional collaboration within renewables.
Total revenues and other income came in at $54.24 billion for the second quarter ended June 30, up 81.8% year-over-year. Adjusted net income attributable to MPC rose significantly from the prior-year quarter to $5.69 billion. Its adjusted income per share stood at $10.61, up considerably from the prior-year period.
For the fiscal third quarter ended September 2022, the consensus EPS estimate of $7.03 indicates an 862.7% improvement year-over-year. For the same quarter, analysts expect revenue to come in at $40.77 billion, representing a 25% improvement year-over-year. MPC has topped consensus EPS estimates in each of the trailing four quarters, which is impressive.
MPC has gained 74.2% year-to-date to close its last trading session at $111.44. The stock has gained 63.4% over the past year.
It’s no surprise that MPC has an overall A rating, which equates to a Strong Buy in our POWR Ratings system. The POWR Ratings assess stocks by 118 different factors, each with its own weighting.
MPC is also rated an A for Growth, Momentum, and Quality. Within the B-rated Energy – Oil & Gas industry, it is ranked #7 of 94 stocks. To see additional POWR Ratings for Sentiment, Value, and Stability for MPC, click here.
Valero Energy Corporation (VLO)
VLO manufactures, markets, and sells petrochemical products and transportation fuels internationally. The company operates through its three broad segments – Refining; Renewable Diesel; and Ethanol.
On September 26, it was announced that VLO had reduced its…
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