3 Energy Stocks Worth Scooping Up as Crude Oil Drops More Than 10%

Crude oil has been one of the best-performing assets in 2021 with a 61.9% gain. The major factor in this rise has been that demand has bounced back much faster than anticipated, and it never declined as much as expected during the pandemic and shutdowns. According to the IEA, global oil demand fell to an average of 91.5 million barrels per day in 2020 from 100.3 million barrels per day in 2019.

On the other hand, oil production was drastically cut during 2020 and has been slower to come back to pre-pandemic levels. 2019 saw production of 95 million barrels per day, while it declined to 88.4 million barrels per day. In 2021, we are expected to average around 92 million barrels per day with this figure expected to reach 100 million barrels per day over the next couple of years.

Lately, oil has pulled back and is now down more than 10% from its recent high above $85. Over the past year, such pullbacks have proven to be great entry points. 3 oil and gas stocks that investors should consider buying on this correction are Continental Resources (CLR – Get Rating), Occidental Petroleum (OXY – Get Rating), and Suncor Energy (SU – Get Rating). 

Continental Resources (CLR)

CLR is a crude oil and natural gas company with properties primarily in the north, south, and east regions of the United States. The Oklahoma City, Okla.-based concern sells its crude oil and natural gas production to refiners, utilities, and natural gas gathering and processing companies.

Over the last month, CLR is down by about 20%. While there could certainly be some more pain in the short term, this should prove to be a good buying opportunity in the longer term. One reason is the company’s strong earnings report.

In Q3, CLR reported $1.20 in EPS which was a significant improvement from its loss of $0.16 per share last year. Revenue was up more than 100% from last year’s $692 million. The company also increased its dividend to $0.20 per share from $0.15 per share. It also plans to buy more than $600 million of stock. It also forecasts $2.6 billion in free cash flow generation for 2021.

These earnings indicate that CLR is one of the highest-quality producers with a cost of production under $50 per barrel. CLR’s POWR Ratings reflect this promising outlook. The stock has an overall B rating, which equates to a Buy. B-rated stocks have posted an average annual performance of 19.7% which compares favorably to the S&P 500’s annual performance of 7.1%.

The stock has an A grade for Momentum and Quality. Click here to see the complete ratings for CLR.

Occidental Petroleum (OXY)

OXY is an independent oil and gas exploration company that operates primarily in the United States, the Middle East, Africa, and Latin America​​.​ The company operates through three segments: Oil & Gas; Chemical and Marketing; and Midstream. In addition to oil, the company also produces basic chemicals, petrochemicals, and specialty chemicals. About 50% of its reserves are oil with the other 50% being natural gas.

OXY recently delivered a blowout quarter. Not surprising as oil prices and natural gas prices are almost 100% higher over the past year, and the company is pumping more oil. Thus, OXY topped analysts’ expectations at $0.87 per share which was a sharp turnaround from its $0.84 per share loss last year. Revenue was also 107% higher.

The company has been using its cash flow to pay off some of its debt rather than investing in new capacity or production. This has been rewarded by shareholders, and many expect that…

 

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