S&P 500 energy companies, like Diamondback Energy (FANG), EOG Resources (EOG) and APA (APA) are all up huge this year. But even so, they join six S&P 500 energy stocks that still have 30% or more upside in the next 12 months, says an Investor’s Business Daily analysis of data from S&P Global Market Intelligence and MarketSmith.
“Energy stocks are some of the most heavily covered by analysts. The sector also has the highest percentage of buy ratings,” says Bespoke Investment Group.
S&P 500 Energy Stocks Turn On The Gas
S&P 500 energy stocks are ruling the sectors this year. The stats are definitive.
Just this year so far, the Energy Select Sector SPDR ETF (XLE) is up 31.1%. That’s easily No. 1 among the 11 S&P 500 sectors. It easily tops No. 2, Real Estate Select Sector SPDR (XLRE) up 29.4%. And it’s topping the SPDR S&P 500 ETF Trust’s (SPY) 19.6% rise.
A rebounding global economy, rising from the lows of last year, is bullish for oil and gas demand. The price of light crude oil on the Nymex is up more than 90% from its lows of the past 52 weeks. And the price of Henry Hub natural gas has more than doubled from its low in the past year.
Analysts see huge upside in S&P 500 energy stocks, too. Even after jumping more than 30% this year, analysts still think the S&P 500 energy sector has the most room to run higher. Nearly 65% of analysts’ ratings in the energy sector are “buys,” says Bespoke Investment Group. That’s higher than in any other sector.
But perhaps more importantly, analysts think the S&P 500 energy sector is still 21.5% undervalued. That makes it the most undervalued of all S&P 500 sectors, Bespoke says. The S&P 500, in contrast, only has 10% upside left until hitting analysts’ consensus 12-month price target.
Analysts, though, don’t like all S&P 500 energy stocks equally. They only see 30% or more upside in six of the 22 stocks in the sector, or just a quarter of them.
But which energy stocks are analysts’ favorites?
FANG Is The New Fang
Analysts’ hopes are highest for Diamondback Energy, which trades by the symbol FANG. They think shares of the Midland, Texas-based oil and gas company can still rise more than 40% until hitting the 12-month price target of 80.07.
What’s impressive, in addition to the stock’s 98 IBD Composite Rating, is that it’s already up more than 65% this year. So analysts’ upside is on top of a big move already.
Why such bullishness? Analysts think Diamondback Energy’s profit will boom more than 236% in 2021 to $10.22 a share. And next year, analysts think Diamondback Energy’s earnings per share will jump another 30%.
Picking Up Other Energy Gems
Other top picks by analysts are also strong performers, already, too. This shows many of the leading energy firms are seen pulling further ahead.
Another favorite is EOG, which sports a 95 Composite Rating, in part, by rallying more than 48% this year already. Analysts think EOG’s profit will jump more than 400% in 2021, followed by a nearly 4% profit jump in 2022. And that’s enough to help push the stock up another 33%, analysts say.
But it’s not exclusively top-performing energy stocks analysts like most. Philips 66, a Houston-based energy company, is one of the rare energy stocks down this year. It’s off 6% in 2021 so far, to 69.94. And it’s Composite Rating is low. And yet, analysts think there’s 36% upside in the stock.
So don’t fret missing the S&P 500 energy rally too much. Analysts think there’s still gas in the tank.
S&P 500 Energy Stocks Analysts Like Most
Based on potential upside to 12-month price targets
|Company||Symbol||YTD % ch.||Target||Implied Upside||Composite Rating|
|Pioneer Natural Resources||(PXD)||37.9%||208.15||32.6%||91|
Sources: IBD, S&P Global Market Intelligence, to analysts’ 12-month price target
Follow Matt Krantz on Twitter @mattkrantz
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