3 Energy Giants With Over 40% Growth Potential According to InvestingPro

 | Oct 03, 2023 06:11AM ET

  • Shell's stocks show a persistent upward trend.
  • Equinor demonstrates stable growth prospects, although overcoming key resistance poses a challenge for potential buyers.
  • Meanwhile, Southwestern Energy tries to benefit from increasing US LNG exports

    • Energy companies have seized the attention of investors over the last few months, as the prices of crude oil and, to a lesser extent, natural gas have jumped higher once again.

    While this uptrend hasn't fully transmitted to energy stocks, savvy investors have begun to expect very positive earnings for the sector in the quarters ahead, likely pushing stocks upward.

    This outlook is further supported by our InvestingPro

    In the context of our current analysis, it's crucial to consider the upcoming OPEC+ cartel meeting scheduled for October 4. However, while it's improbable that this meeting will bring about a significant breakthrough, it's also worth noting that the group's present strategy revolves around production reduction, with Saudi Arabia and Russia spearheading this effort by jointly committing to cut production by 1.3 million barrels per day by year-end. This concerted effort is contributing to the increase in oil prices.

    1. Southwestern Energy: Attractive Valuation/h2

    Southwestern Energy is a U.S.-based upstream company that primarily focuses on natural gas production within the Appalachian Basin in Pennsylvania and West Virginia, accounting for 73% of its reserves. Additionally, it operates in the Haynesville Shale field, contributing to 27% of its reserves.

    When considering a long-term perspective, the company is poised to benefit from the projected increase in demand for natural gas, making it an excellent energy source to complement renewable energy sources (RES). Furthermore, the company's exports are expected to play a pivotal role, with projections indicating a doubling of export volumes over the next two years from the current level of 12 BCF/d.

    From a strictly fundamental standpoint, Southwestern Energy not only boasts a high fair value ratio but also ranks among the companies with the strongest financial health. Moreover, it offers an attractive price/earnings and price/book value valuation when compared to its competitors.