In this article, we will take a look at the 12 high growth energy stocks to buy. To skip our analysis of the recent market trends and activity, you can go directly to see the 5 High Growth Energy Stocks to Buy.
Geopolitical tensions, once again, are having an impact on global oil prices. Yemen's Houthis have increased their attacks on ships passing through the Red Sea which has led to massive disruptions to maritime trade. On December 19, the United States government launched a multinational operation to safeguard the commercial vessels passing through the Red Sea. Yemen’s Houthis remain defiant, and companies remain cautious about undertaking voyages across the Red Sea.
In recent days, some of the leading companies using the Red Sea trade route, which connects Europe and North America with Asia via the Suez Canal, have rerouted their vessels or suspended transportation until further notice. British oil and gas company BP Plc (NYSE:BP) paused all transits from the Red Sea while one of the largest shipping companies, A.P. Møller - Mærsk A/S, has started to divert its Red Sea bound vessels around the Cape of Good Hope on Africa’s southern tip. The reroute significantly increases the distance which leads to higher cost of transportation and longer lead times.
Oil futures have traded upward since the announcements by BP and Equinor to pause transits from the Red Sea. Both the Brent Crude and West Texas Intermediate Crude futures reached their two weeks highs on December 19 to settle at $79.23 and $73.44 a barrel. The Brent Crude future prices were up more than 8% from their lowest closing price in December while WTI Crude was up more than 7%.
Oil prices are expected to remain elevated in 2024 due to multiple factors, including “constrained supply, heightened geopolitical risk, and growing demand, which should generally support profitability among oil and gas producers”, according to a report by Fidelity Investments. You can read more about the recent performance of the energy sector in our recently published article: 13 Most Promising Energy Stocks According to Analysts
Recently, the COP28 concluded with delegates from more than a hundred countries agreeing to triple global renewable energy capacity by 2030. On our list of 12 high growth energy stocks to buy, Cameco Corporation (NYSE:CCJ) is a notable name. The company is expected to benefit significantly from the shift towards greener energy sources as it is one of the largest providers of uranium, a much cleaner source of energy as compared to fossil fuels. You can read more about COP28 and environmental commitments, in our recently published article: 13 Most Profitable Utility Stocks Now
Majority of the stocks on our list have a history of paying a portion of their income to shareholders in the form of dividends. In terms of dividend yields, Frontline Ltd (NYSE:FRO), Sitio Royalties Corp. (NYSE:STR), and Woodside Energy Group Ltd. (NYSE:WDS) rank the highest on our list, respectively, based on the share prices on December 15.
An aerial shot of the uranium mines, demonstrating the company's vast mineral resources.
Methodology
To compile our list of the high growth energy stocks to buy, we first made a list of energy stocks with a year-over-year revenue growth of more than 25% for the latest quarter. We only retained companies with market capitalization of more than $2.0 billion and also removed companies facing significant uncertainty. Out of these, the stocks with the highest revenue growth rates were selected. The stocks on our list have been ranked in an ascending order of revenue growth rate. In addition, we have provided the number of hedge funds that had bought their shares as of September 2023 which was determined through Insider Monkey’s database of 910 prominent hedge funds.
Based in Houston, Texas, Par Pacific Holdings, Inc. (NYSE:PARR) is an energy company providing both renewable and conventional fuels to the western United States. It owns and operates 124,000 bpd of combined refining capacity in the Pacific Northwest and the Rockies, and 94,000 bpd of operating refining capacity in Hawaii, in addition to other supporting operations such as retail facilities.
On November 6, Par Pacific Holdings, Inc. (NYSE:PARR) released its financial results for Q3 2023. Its revenue increased by 25% y-o-y to $2.6 billion while net income declined by 36% y-o-y to $171 million. Its normalized EPS of $3.15 surpassed consensus estimates by $0.04.
Earlier in June, Par Pacific Holdings, Inc. (NYSE:PARR) completed the acquisition of the Billings refinery and associated marketing and logistics assets from ExxonMobil Corporation for a base purchase price of $310 million.
As of Q3 2023, Par Pacific Holdings, Inc. (NYSE:PARR) shares were held by 24 out of 910 hedge funds tracked by Insider Monkey with a total value of $234 million. Its largest shareholder was David Rosen’s Rubric Capital Management with ownership of 2.0 million shares valued at $71 million.
Limassol, Cyprus-based Frontline PLC (NYSE:FRO) is a leading seaborne and refined products transportation services provider. Its fleet consists of 65 vessels, including 22 VLCCs, 25 Suezmax Tankers, and 18 LR2/Aframax tankers, with an aggregate capacity of 12.6 million DWT, as of September 30, 2023.
In July 2022, Frontline PLC (NYSE:FRO) announced that it had signed a definitive agreement to merge into Euronav NV (NYSE:EURN) in a stock-based transaction with an exchange ratio of 1.45 Frontline PLC (NYSE:FRO) shares for 1 share of Euronav NV (NYSE:EURN). On January 9, 2023, Frontline PLC (NYSE:FRO) announced that it had terminated the agreement for the merger.
Later on in October 2023, Frontline PLC (NYSE:FRO) announced agreements with Euronav to acquire a high-quality ECO fleet of 24 VLCCs with an average age of 5.3 years, for an aggregate purchase price of $2.35 billion.
As of Q3 2023, 17 of the 910 prominent hedge funds tracked by Insider Monkey held shares of Frontline PLC (NYSE:FRO) with a total value of $173 million.
Perth, Western Australia-based Woodside Energy Group Ltd. (NYSE:WDS) is an independent oil and gas company that explores, develops, produces, and supplies energy. It explores and produces oil and gas from a portfolio of facilities in association with some of the world’s major oil and gas companies.
On December 7, Woodside Energy Group Ltd. (NYSE:WDS) confirmed media speculation that the company is in discussions regarding a potential merger with Australian oil and gas company, Santos Ltd. (ASX:STO). Woodside Energy Group Ltd. (NYSE:WDS) clarified that:
“Discussions remain confidential and incomplete, and there is no certainty that the discussions will lead to a transaction. As a global energy company, Woodside continuously assesses a range of opportunities to create and deliver value for shareholders. Woodside will continue to update the market in accordance with its continuous disclosure obligations.”
Like other stocks such as Permian Resources Corporation (NYSE:PR), Cameco Corporation (NYSE:CCJ), and Noble Corporation (NYSE:NE), Woodside Energy Group Ltd. (NYSE:WDS) is among the 12 high growth energy stocks to buy.
Denver, Colorado-based Sitio Royalties Corp. (NYSE:STR) acquires, owns, and manages mineral and royalty interests across a diverse set of operators in unconventional basins within the United States. It owns over 275,000 NRAs, over 190,000 of which are located in the Permian Basin, the largest unconventional resource play in the United States.
On November 8, Sitio Royalties Corp. (NYSE:STR) released its financial results for Q3 2023. Its total revenues increased by 36% y-o-y to $157 million, while it reported a net income of less than $1 million. It generated a normalized EPS of $0.08 for the quarter, $0.19 less than the consensus estimates.
Earlier in November, Sitio Royalties Corp. (NYSE:STR) entered into an agreement to sell all of its mineral and royalty interests in the Appalachia and Anadarko Basins to an undisclosed third party for $117.5 million of cash consideration.
As of Q3 2023, 22 of the 910 hedge funds tracked by Insider Monkey held Sitio Royalties Corp. (NYSE:STR) shares valued at a combined total of $499 million. Howard Marks’ Oaktree Capital Management held the highest number of shares among hedge funds with ownership of 12.9 million shares valued at $313 million.
Midland, Texas-based Permian Resources Corporation (NYSE:PR) is an independent oil and natural gas company focused on responsible acquisition, optimization, and development of oil and liquids-rich natural gas assets. Its assets and operations are concentrated in the core of the Delaware Basin.
On November 1, Permian Resources Corporation (NYSE:PR) closed the acquisition of Earthstone Energy, creating the second largest Permian Basin pure-play E&P company. The all-stock transaction valued the target company at $4.5 billion.
On November 30, Stifel analyst Derrick Whitfield lowered the price target for Permian Resources Corporation (NYSE:PR) shares to $18 from $20 and maintained a ‘Buy’ rating. The target price represents a potential upside of 35.14% based on the share price on December 18.
Permian Resources Corporation (NYSE:PR) shares, worth $505 million, were held by 36 of the 910 prominent hedge funds tracked by Insider Monkey, as of Q3 2023.
Houston, Texas-based Patterson-UTI Energy, Inc. (NASDAQ:PTEN) is a leading provider of drilling and completion services to oil and natural gas exploration and production companies in the United States and other select countries.
On September 1, Patterson-UTI Energy, Inc. (NASDAQ:PTEN) announced the completion of its previously announced all-stock merger with NexTier Oilfield Solutions Inc. Following the transaction, which implied an enterprise value of $5.4 billion for the combined company, existing Patterson-UTI Energy, Inc. (NASDAQ:PTEN) shareholders own nearly 55% stake in the company.
As of Q3 2023, Patterson-UTI Energy, Inc. (NASDAQ:PTEN) shares were owned by 33 of the 910 hedge funds tracked by Insider Monkey, with the total shares held by them valued at $764 million.
Aristotle Capital Boston, LLC, an investment advisor, made the following comments about Patterson-UTI Energy, Inc. (NASDAQ:PTEN) in its “Small Cap Equity Strategy” Q3 2023 investor letter:
“Patterson-UTI Energy (PTEN), an oilfield services company focused on drilling and pressure pumping solutions was added to the portfolio following its merger with NexTier Oilfield Solutions. Overall, we maintain a positive view on the business combination as the merging of the two entities creates a comprehensive drilling and completions franchise with leadership positions in contract drilling, pressure pumping and directional drilling. Furthermore, we believe the company will benefit from greater size and scale, synergistic cost savings initiatives, and a more diversified suite of offerings to serve its customers.”
Based in Saskatchewan, Canada-based Cameco Corporation (NYSE:CCJ) is one of the largest global providers of the uranium fuel with controlling ownership of the world’s largest high-grade reserves and low-cost operations, as well as investments across the nuclear fuel cycle, including stakes in Westinghouse Electric Company and Global Laser Enrichment.
As of Q3 2023, 54 leading hedge funds tracked by Insider Monkey owned shares of Cameco Corporation (NYSE:CCJ), the highest on our list of 12 high growth energy stocks to buy. Its largest shareholder was Richard Driehaus’ Driehaus Capital with ownership of 3.9 million shares valued at $155 million.
In its Q3 2023 “Meridian Contrarian Fund” investor letter, Meridian Funds, managed by ArrowMark Partners, made the following comments about Cameco Corporation (NYSE:CCJ):
“Cameco Corp. is a global leader in the mining, fabricating, and refining of uranium products for nuclear power plants around the world. We believe Cameco has the lowest costs, highest grade reserves, and most favorably located mines. [. . .]Small modular reactors (SMRs) are a new format of plant that can be built more cheaply and quickly than traditional plants and are also safer. Modern nuclear waste disposal technology is safe and highly effective. Due to these factors, many countries are extending the lives of their nuclear plants rather than shutting them down, and there are at least 57 new nuclear plants under construction, 100+ planned, and more than 300 proposed compared to the current installed base of 437. Based on this, projected uranium demand is expected to significantly increase while supply will continue to be constrained. This supply/demand imbalance should be very positive for uranium prices, in our view. During the quarter, the stock performed well as uranium spot prices increased by 25%. As contracted prices catch up to spot pricing, we project that Cameco could generate significant earnings and free cash flow gains. We believe Cameco is attractive at current prices. There could also be further upside to earnings from Cameco’s investment in the nuclear division of Westinghouse, which should benefit from new development activity. As such, we maintained a large position in Cameco stock."
