This is an interesting time to be investing in energy stocks.
If you’re a frequent driver (who hasn’t switched to electric vehicles) you’ve surely noticed falling gasoline prices. Gasoline prices are actually down 19% from September and are at their lowest levels in 2023.
Crude oil prices have been falling for seven consecutive weeks, hampered by record U.S. oil production and a weakening Chinese economy. While that’s got to thrill drivers, it’s not so great for energy stocks.
Lower oil prices mean lower revenues and less profits, and that’s a recipe for lower stock prices. So even while the stock market is at all-time highs now, this can be a perilous time for energy stocks.
That’s not to say that energy stocks are off-limits. There are several great names out there that are still getting high marks in the Portfolio Grader. If you’re an investor bullish about the energy sector, these names may be great buys right now.
Profire Energy (PFIE)
You could argue that Profire Energy (NASDAQ:PFIE) is one of the most important energy stocks on the market. And that’s a neat trick, considering it doesn’t drill for oil or gas.
Instead, Profire designs burner and combustion management systems for oilfield and gas companies. Its products help companies control startups and shutdowns and monitor temperatures.
It’s incredibly important and dangerous work, as oil and gas are extremely flammable, and it would be pretty easy for things to get out of control, with deadly consequences.
That’s why I’m not overly worried about Profire even as oil and gas prices fall. Revenue in the third quarter remained strong at $14.8 million, up 16% from a year ago. The company also recorded a gross profit of $7.5 million, which was an increase of 22% from the same quarter a year ago.
PFIE stock is up 51% this year and gets an “A” rating in the Portfolio Grader.
Tidewater (TDW)
Tidewater (NYSE:TDW) is a Houston-based petroleum service company. It operates a fleet of offshore support vessels that provide support offshore to energy exploration and production efforts.
Tidewater offers services for offshore platform maintenance and operation, including platform supply, anchoring, towing, and tug operation.
The company is having a strong year. Revenue in the third quarter was $299.2 million, a marked increase from a year ago when revenue was $191.7 million. That resulted in an income of $26.1 million or 49 cents per share, versus only $5.3 million and 10 cents per share a year ago.
Tidewater says it is seeing inflated profits because of a global supply shortage of large and small offshore vessels needed to service platforms. Investors can only hope that trend continues into the fourth quarter and into 2024.
TDW stock is up 70% in 2023 and gets an “A” rating in the Portfolio Grader.
Noble Corporation (NE)
Noble Corporation (NYSE:NE) is a London-based offshore drilling contractor. It operates worldwide, with ships currently stationed in Ghana, Malaysia, the Netherlands, the Gulf of Mexico, Argentina, Denmark and more.
Earnings and revenue have been flourishing in recent quarters and the company has plenty of work on its plate. Noble brought in $240 million in new contracts in the third quarter, giving it a current backlog of work valued at $4.7 billion.
Revenue in the third quarter was $697 million, up from $306 million a year ago. That resulted in a net income of $158 million or $1.09 per share, versus $41 million and 41 cents per share in the same quarter of 2022.
The strong year prompted Noble to increase its full-year guidance to a revenue range of $2.5 billion to $2.6 billion. Previously, guidance was for a range of $2.35 billion to $2.55 billion.
NE stock is up 19% this year and gets a “B” rating in the Portfolio Grader.
Helix Energy Solutions (HLX)
Helix Energy Solutions (NYSE:HLX) is also based in Houston. The company is a global offshore energy services company that works with offshore oil operators.
Besides an emphasis on increasing efficiency and maximizing the extraction of oil and gas reserves, Helix’s services also include serving as a full-field abandonment contractor to take over and shut down platforms that are winding down. It also provides support services to offshore wind farm developments.
Revenues have been up sharply over the last year. In the third quarter, Helix reported revenue of $395.6 million, versus just $272.5 million a year ago. For the first nine months of the year, revenues of $954.5 million are an improvement over last year’s $585.2 million in the same period.
Helix also recorded a profit of $15.5 million for the quarter versus a loss of $18.7 million in the same quarter last year.
HLX stock is up 38% this year and gets a “B” rating in the Portfolio Grader.
Baker Hughes Co. (BKR)
Baker Hughes Co. (NYSE:BKR) is another oilfield services company with a global footprint. Baker Hughes operates in over 120 countries globally.
It provides oilfield services for onshore and offshore operations, including exploration, construction, operation and decommissioning. Its technology division provides equipment such as pumps, valves, gears, sensors and software for industrial uses.
Baker Hughes also is diversified, with products that support natural gas storage and transportation, carbon capture and hydrogen storage.
The third quarter continued the company’s performance in 2023, with revenues of $6.6 billion jumping 24% from a year ago. Adjusted net income of $427 million was up $163 million from a year ago.
The company received $8.5 billion in orders for the quarter, including new work in Angola, the North Sea and the Middle East.
BKR stock is up 13% this year and gets a “B” rating in the Portfolio Grader.
Oceaneering International (OII)
Oceaneering International (NYSE:OII) serves offshore energy operators by providing engineered products ranging from remotely operated underwater vehicles to sub-sea hardware and project management. The company has over 250 remote vehicles in its fleet to service customer projects.
Its products provide companies with ways to inspect deepwater pipelines, test and map areas of corrosion and map ocean floors, among other services.
Besides oil and gas projects, the company also supports projects to install offshore wind turbine projects, giving it another revenue stream as companies look to reduce their carbon footprints by investing in clean energy.
Revenue in the third quarter was $635.1 million, up from $559.6 million a year ago. Income was $29.8 million, or 29 cents per share, versus $18.3 million and 18 cents per share in the same quarter a year ago.
OII stock is up 16% in 2023 and gets a “B” rating in the Portfolio Grader.
Genesis Energy (GEL)
Genesis Energy (NYSE:GEL) is a midstream energy company. It operates the pipelines and transmission lines, allowing oil, gas and electricity to travel from the source to homes and businesses. The company has 2,400 miles of oil pipelines in the Gulf of Mexico to refineries in Louisiana and Texas.
It also has soda ash production facilities in Wyoming and a sulfur services business that treats, processes and repurposes sour gas streams.
Finally, Genesis maintains a network of onshore pipelines and a fleet of boats and barges to transport crude oil and refined products.
Revenue in the third quarter was $807.6 million, up from $721.2 million a year ago. That resulted in net income of $35.7 million, or 29 cents per share, which was a massive improvement from the company’s loss of $15.3 million and 12 cents per share a year ago.
GEL stock is up 16% this year and gets a “B” rating in the Portfolio Grader.
— Louis Navellier
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Source: Investor Place
