In the vast Australian energy sector, investors have an array of choices, including oil and gas producers, coal miners, renewable energy firms, and uranium developers. To simplify the selection process, I've identified two promising ASX energy stocks that have received buy recommendations from analysts. Let's take a closer look at them:
Deep Yellow Limited (ASX: DYL)
In light of the decarbonization megatrend, nuclear power is experiencing a resurgence in popularity, leading to an anticipated increase in uranium demand over the coming decades. With uranium supply expected to lag behind demand, the price of this essential element is likely to rise.
Investors seeking exposure to uranium can consider ASX DYL, a company that has received a bullish rating from Bell Potter. The brokerage firm has assigned Deep Yellow a speculative buy rating and a price target of $1.84, implying a 57% upside from the current share price. Bell Potter provided the following commentary:
"We see DYL in pole position to capitalize on the momentum and advance its two flagship projects into production within the next 3-4 years. With average planned production capacity at Tumas of ~3Mlbpa over 22 years and ~3.1Mlbs over 15 years at Mulga Rock, DYL offers longevity at the perfect point in the uranium price cycle."
Woodside Energy Group Ltd (ASX: WDS)
For investors interested in oil and gas, Woodside Energy is a compelling ASX energy stock to consider. Analysts at Goldman Sachs recommend Woodside due to its appealing valuation and potential for production growth.
Goldman Sachs has given Woodside Energy a buy rating and set a price target of $38.30, indicating a potential 15% upside for investors. The firm provided the following insight:
"Woodside produces over 500 kboe/d LNG, gas, and oil across Australia and the Americas, and offers Australia's highest exposure to spot LNG and oil pricing, which we expect will remain elevated due to structural underinvestment despite near-term demand uncertainty, funding attractive growth projects, and shareholder returns. We are Buy rated on WDS on (1) Attractive valuation trading at a 17% discount to NAV, (2) Strong returns trading on a 7% NTM dividend yield, (3) Strong near-term production growth of 9% over the next year, increasing oil exposure where we expect prices to remain elevated."
These two ASX energy stocks present promising investment opportunities in the dynamic energy sector, with Deep Yellow focusing on uranium and Woodside Energy in the oil and gas segment.