Discover the top energy stocks to invest in amid Morgan Stanley’s bright outlook
The Rise of Energy Stocks
The allure of Artificial Intelligence and Big Tech might be captivating investors, but the prudent ones are turning their attention to energy stocks. Energy equities have sprinted out of the gate this year, with the Energy Select Sector SPDR Fund notching double-digit YTD gains, running neck and neck with tech stocks. Interestingly, Morgan Stanley has pivoted from a ‘neutral’ stance to an ‘overweight’ position on energy stocks. This u-turn stems from the failure of top energy companies’ stock prices to keep pace with the bullishness in fossil fuels, presenting investors with an opportunity to capitalize on promising prospects and appealing valuations.
Occidental Petroleum (OXY): A Titan in Oil and Gas
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Occidental Petroleum (OXY) isn’t merely a run-of-the-mill oil and gas player; it’s a behemoth that has ensnared some of the most prominent names in the investing universe. The company stands tall amongst top Warren Buffet stocks, with Berkshire Hathaway holding a substantial 27.8% stake. Buffet’s fondness for value stocks that pay dividends makes OXY a perfect fit in his portfolio. Over the past three years, Occidental has hiked its dividend payouts at a staggering 180% CAGR.
Recording a recent 22% uptick in its payout and steadfastly distributing dividends for 34 consecutive years, OXY offers an enticing narrative. Currently trading at a modest 1.91 times forward sales estimates, the stock presents a promising upside. Financially, Occidental keeps outstripping expectations, delivering solid top-and-bottom-line results. Moreover, its burgeoning oil production accentuates its operational prowess. With such robust financial and operational fundamentals, Occidental emerges as a compelling investment choice.
Charting the Success of NextEra Energy (NEE)
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NextEra Energy (NEE) stands as a stalwart in the green energy arena, considered a safe bet by many. Its robust utility operations have laid the groundwork for ambitious clean energy ventures. Serving over 11 million consumers through its utility segment, NEE is poised to play a pivotal role in America’s shift towards green energy. By earmarking $85 billion for green infrastructure by 2025, the company solidifies its position as a frontrunner in its domain.
Touting a stellar performance in 2023, with a 34% surge in sales, reaching $28.11 billion, and a whopping 76% rise in net income to $7.3 billion, NEE impresses on many fronts. Furthermore, its recent approval of an updated dividend policy promising a 10% dividend growth rate till 2026 adds to its allure. Having raised its dividend payouts for 28 consecutive years, NEE showcases operational excellence, a strategic vision, making it a prime investment opportunity within the clean energy sector.
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In a sizzling uranium market that has seen prices soar to 16-year peaks surpassing $100 per pound, focus on nuclear energy has intensified. Amid this optimistic narrative, Cameco (CCJ) emerges as a heavyweight in the uranium mining realm, with operations spanning Saskatchewan, the U.S., and a strategic alliance in Kazakhstan.
With a track record exceeding 30 years, fortified by long-term supply agreements, Cameco is strategically positioned to capitalize on these favorable market conditions. In a strategic move, it acquired a 49% stake in Westinghouse Electric in concert with Brookfield Asset Management, further cementing its foothold in the sector. This alliance is expected to yield an impressive adjusted EBITDA ranging between $445 million and $510 million, fueling a projected annual growth rate of 6% to 10%. These developments spotlight Cameco’s crucial role in powering the trajectory of nuclear energy.
As of this publication date, Muslim Farooque had no direct or indirect positions in the securities discussed. The opinions expressed here are solely those of the author, adhering to the InvestorPlace.com Publishing Guidelines.
