In this article, we will be taking a look at 11 hot oil stocks to buy now. To skip our detailed analysis of the energy sector, you can go directly to see the 5 Hot Oil Stocks To Buy Now.
Oil: The Most Investable Space In 2024?
The energy market is one that can appear to be heavily fluctuating based on demand and supply dynamics in the market. However, energy stocks are typically considered to have high potential during periods of economic growth, so they can be potentially good investments as long as they are approached carefully. According to Fidelity Investments' 2024 Outlook for the energy sector, investors can expect limited supply, healthy demand, and rising investments in energy production to positively contribute to the sector. Oil prices are expected to remain high during 2024, propelling hot oil and energy stocks to more elevated heights this year. This would be in stark contrast to the sector's slow performance during 2023.
On January 4, Jeff Currie, Goldman Sachs Partner Alumnus, and Advisory Board Chair at the University of Chicago's Energy Policy Institute, joined CNBC's "Squawk Box" to give his take on the energy sector and oil markets entering into 2024. Here's what he had to say:
"It is the most investable space out there in the economy right now. The return on capital employed exceeds 20% in many parts of the world."
Geopolitical Tensions: A Cause For Concern?
Like Currie, many other financial analysts today are persisting with their positive outlook for the energy and oil markets in 2024. However, global geopolitical tensions are resulting in some concern. For instance, indiscriminate attacks in the Red Sea against commercial vessels are leading to widespread concern over the impact of such attacks on the energy sector. However, according to US Energy Secretary Jennifer Granholm, the impact of such attacks on the energy sector is considerably low at this point. Granholm joined CNBC's "Squawk Box" on January 5 to discuss this issue. Here's what she said:
"With respect to how we're seeing it play out in the energy space is that, so far, the ongoing conflict and attacks, which are indiscriminate, they're really not on any commercial vessel that's coming through, whether it's touching or related to Israel or not, but this conflict, they have not really been successful in getting their targets. This conflict has really only had a limited impact on energy prices. For us, in the US, gas prices, for example, are at $3.09, today. More than $1.93 lower than the peak after Putin's war."
Continuing Positive Outlook
Considering the above, many investors may benefit from beginning to look at oil and energy stocks as compelling investments heading into the new year. There seem to be many attractive options in the industry today, such as hot oil stocks with high demand, like Exxon Mobil Corporation (NYSE:XOM), Kinder Morgan, Inc. (NYSE:KMI), and Chevron Corporation (NYSE:CVX). Apart from these oil companies though, there are many other options available to energy investors this year as well. On December 6, Rob Thummel, Tortoise Senior Portfolio Manager, joined CNBC's "Closing Bell Overtime" to discuss energy investment options for investors in 2024. Here's what he had to say:
"If oil's lower for longer, that means demand's probably going to go up. You're gonna transport more energy. And so, energy infrastructure is a great place to be in the energy asset class, if you're looking for an energy play. Also with a lot of these energy infrastructure stocks, you get really high dividend yields. So as we look at 2024, interest rates are probably coming down, the 10-year is probably coming down, so if investors are looking for 'where can I get exposure to the equity market, but also significant cash income?' energy infrastructure is a great place to be."
Generally speaking, energy as a whole can thus be said to be a highly attractive investment space for investors this year. Whether you pick one of the hot oil stocks we've named below or energy infrastructure names for dividends, you're bound to be in good hands. The stocks we have listed below are among the top hot oil stocks to buy now, and they include some undervalued oil stocks as well.
11 Hot Oil Stocks To Buy Now
An oil rig surrounded by the expanse of sea, the pumping operations in progress.
Our Methodology
To select the stocks for our list, we used a stock screener to identify oil stocks with an average three-month volume of over five million as of January 9. We then selected 11 hot oil stocks to buy now and ranked them based on their average three-month volumes, from the lowest to the highest. The stocks we picked only include well-known names trading on the Nasdaq Composite Index or the New York Stock Exchange. We also mentioned hedge fund information for the stocks by using Insider Monkey's hedge fund data for the third quarter.
Hedge funds’ top 10 consensus stock picks outperformed the S&P 500 Index by more than 140 percentage points over the last 10 years (see the details here). That’s why we pay very close attention to this often-ignored indicator.
Average 3-Month Volume as of January 9: 9.4 million
Number of Hedge Fund Holders: 41
Based in Calgary, Canada, Cenovus Energy Inc. (NYSE:CVE) is an integrated oil and gas company. It develops, produces, refines, transports, and markets crude oil and natural gas in Canada and across the globe.
Cenovus Energy Inc. (NYSE:CVE) was spotted in the 13F holdings of 41 hedge funds at the end of the third quarter. Their total stake value was $1.7 billion.
L1 Capital mentioned Cenovus Energy Inc. (NYSE:CVE) in its third-quarter 2023 investor letter:
“Cenovus Energy Inc. (NYSE:CVE) (Long +23%) shares rallied as WTI oil prices rose to ~US$91/bbl over the month, the highest level since November 2022. The company also had tailwinds from higher refinery margins, particularly in North America which remains their key exposure. Cenovus continues to generate strong free cash flow at current oil price levels, with the long-life nature of its oil sands assets and its low cost of production providing a break-even oil price at around ~US$40/bbl. We estimate the company can reach its net debt target in early CY24, enabling a step-up in shareholder returns through on-market share buybacks.”
Like Exxon Mobil Corporation (NYSE:XOM), Kinder Morgan, Inc. (NYSE:KMI), and Chevron Corporation (NYSE:CVX), Cenovus Energy Inc. (NYSE:CVE) is a hot oil stock to buy now.
Average 3-Month Volume as of January 9: 9.7 million
Number of Hedge Fund Holders: 75
On December 13, John Freeman, an analyst at Raymond James, maintained a Strong Buy rating on Occidental Petroleum Corporation (NYSE:OXY) shares. The analyst also placed a price target of $70 on the stock.
Occidental Petroleum Corporation (NYSE:OXY) is another integrated oil and gas company on our list. Based in Houston, Texas, the company engages in the acquisition, exploration, and development of oil and gas properties in the US, the Middle East, North Africa, and Latin America.
We saw 75 hedge funds long Occidental Petroleum Corporation (NYSE:OXY) in the third quarter, with a total stake value of $17.8 billion.
Holding 224.1 million shares in the company, Berkshire Hathaway was the largest shareholder in Occidental Petroleum Corporation (NYSE:OXY) at the end of the third quarter.
Average 3-Month Volume as of January 9: 9.8 million
Number of Hedge Fund Holders: 45
Point72 Asset Management was the largest shareholder in Marathon Oil Corporation (NYSE:MRO) at the end of the third quarter, holding 5.6 million shares.
Marathon Oil Corporation (NYSE:MRO) is an oil and gas exploration and production company based in Houston, Texas. It explores, produces, and markets crude oil and condensate, natural gas liquids, and natural gas, among more.
A Strong Buy rating and a price target of $35 were maintained on Marathon Oil Corporation (NYSE:MRO) by John Freeman at Raymond James on December 15.
Marathon Oil Corporation (NYSE:MRO) was seen in the portfolios of 45 hedge funds in the third quarter, with a total stake value of $956 million.
Average 3-Month Volume as of January 9: 10.9 million
Number of Hedge Fund Holders: 72
At the end of the third quarter, 72 hedge funds were long Chevron Corporation (NYSE:CVX), with a total stake value of $21.4 billion.
Chevron Corporation (NYSE:CVX) is an energy company engaged in integrated energy and chemicals operations in the US and internationally. It explores, develops, produces, and transports crude oil and natural gas, among more.
Lloyd Byrne at Jefferies upgraded Chevron Corporation (NYSE:CVX) from Hold to Buy and announced a $184 price target on the stock on January 8.
Average 3-Month Volume as of January 9: 13.6 million
Number of Hedge Fund Holders: 42
Kinder Morgan, Inc. (NYSE:KMI) is an oil and gas storage and transportation company based in Houston, Texas. The company operates through its four segments: Natural Gas Pipelines, Products Pipelines, Terminals, and CO2. It owns and operates interstate and intrastate natural gas pipelines and underground storage systems, among more.
There were 42 hedge funds long Kinder Morgan, Inc. (NYSE:KMI) in the third quarter, with a total stake value of $769 million.
Holding 12.9 million shares in the company, FPR Partners was the largest shareholder in Kinder Morgan, Inc. (NYSE:KMI) at the end of the third quarter.
Average 3-Month Volume as of January 9: 14.1 million
Number of Hedge Fund Holders: 34
We saw 34 hedge funds long Energy Transfer L.P. (NYSE:ET) at the end of the third quarter. Their total stake value was $803.2 million.
Energy Transfer L.P. (NYSE:ET) is an energy company that provides energy-related services in the oil and gas storage and transportation industry. The company is based in Dallas, Texas. It owns and operates approximately 11,600 miles of natural gas transportation pipelines, and three natural gas storage facilities in Texas, among more.
Like Exxon Mobil Corporation (NYSE:XOM), Kinder Morgan, Inc. (NYSE:KMI), and Chevron Corporation (NYSE:CVX), Energy Transfer L.P. (NYSE:ET) is among the hottest stocks to buy now.
