Kalkine Media lists five energy stocks to watch in Q4

October 18, 2022 02:01 AM PDT | By Rupam Roy
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  • EQT Corporation (NYSE: EQT) is slated to release its Q3 FY22 earnings results on October 26.
  • The VLO stock jumped around 49 per cent YoY.
  • Targa Resources, Inc. (NYSE: TRGP) noted a 77 per cent jump in its Q2 FY22 revenue.

The energy market has been at the forefront this year, especially after the Russia-Ukraine war, as it triggers concerns over a global energy crisis. The COVID-19 pandemic has already hampered the global markets, while this year's geopolitical turmoil has added more worries.

Some of the companies in the energy sector include EQT Corporation (NYSE: EQT), Valero Energy Corporation (NYSE: VLO), Coterra Energy Inc. (NYSE: CTRA), Diamondback Energy, Inc. (NASDAQ: FANG), and Targa Resources, Inc. (NYSE: TRGP).

Now, given the stubbornly-high inflation and the central bank's restrictive effort to control it which had already spurred fears of a probable recession, investors are keeping a close watch on the energy sector.

Recently, the Organization of the Petroleum Exporting Countries or OPEC+ has agreed to cut the oil supply, which has raised concerns over a global energy crisis. The OPEC+ countries have also defied calls from the US for more output to provide support to the global economy.

The major oil producers or the OPEC+ have agreed to trim their production by two million barrels per day from next month, which has received serious criticism from the US and its allies.

Let's take a look at the performance of the oil and gas companies amid volatile trading in the broader market:

EQT Corporation (NYSE: EQT)

The energy company, EQT Corporation holds a dividend yield of 1.46 per cent, and the company primarily engages in hydrocarbon exploration and pipeline transportation.

The price of the EQT stock went up over 89 per cent YTD through October 17, and over 108 per cent on an annual basis. On September 14 this year, the stock of the energy firm touched its 52-week high of US$ 51.97.

The company has planned to issue its Q3 FY22 earnings and operating results on Wednesday, October 26, after the closing bell, it said on October 13.

Meanwhile, for the first six months ended on June 30, 2022, EQT Corporation's total operating revenue was US$ 1.94 billion, against US$ 689.80 million in the year-ago period. In the first half of fiscal 2022, the hydrocarbon exploration firm's net loss totaled US$ 624.68 million, against a loss of US$ 970.68 million in H1FY22.

Valero Energy Corporation (NYSE: VLO)

The petroleum refineries company, Valero Energy's dividend yield was 3.43 per cent. The stock of the manufacturer and marketer of transportation fuels and other related petroleum products rose over 56 per cent YTD and 49 per cent YoY.

The NYSE-listed energy firm said that it would report its financial results on October 25, at 10 am ET. Meanwhile, in Q2 FY22, the San Antonio-based petroleum company's revenue was US$ 51.64 million, versus US$ 27.74 million in the preceding year's same quarter.

Valero Energy Corporation's net income was US$ 4.76 million in Q2 FY22, up from US$ 292,000 in the year-ago quarter.

Coterra Energy Inc. (NYSE: CTRA)

Coterra Energy is a hydrocarbon exploration firm with a dividend yield of 2.11 per cent. Its stock experienced gains of over 52 per cent YTD and 42 per cent in the last 12 months through October 17.

The US$ 23.03 billion market cap energy company's revenue was US$ 2.57 billion in Q2 FY22, against US$ 324 million in Q2 FY21. Coterra Energy's net income also noted a robust jump to US$ 1.22 billion in Q2 FY22 from US$ 30 million in the year-ago quarter.

Five energy stocks and their YTD returnsSource: ©Kalkine Media®; © Canva Creative Studio via Canva.com

Diamondback Energy, Inc. (NASDAQ: FANG)

Diamondback is an independent oil and natural gas firm with a dividend yield of 2.15 per cent and a P/E ratio of 6.56. The stock price of the US$ 24.76 billion market cap hydrocarbon exploration firm added about 36 per cent YTD and 35 per cent YoY while jumping around 17 per cent so far this month through October 17.

Its earnings and operating results for the latest quarter would be released on November 8.  Meanwhile, in Q2 FY22, Diamondback Energy's revenue totaled US$ 2.76 billion, up from US$ 1.68 billion in Q2 FY21.

The Midland-based independent oil and gas firm's net income was US$ 1.46 billion in the second quarter of 2022, a jump from US$ 311 million in Q2 FY21.

Targa Resources, Inc. (NYSE: TRGP)

Targa Resources is a midstream energy infrastructure corporation with a dividend yield of 2.16 per cent. The US$ 14.86 billion market cap energy company delivers natural gas and natural gas liquids (NGL) in the US. The company's stock jumped 26 per cent YTD and 18 per cent YoY.

Targa Resources Inc's revenue jumped 77 per cent YoY to US$ 6.05 billion in Q2 FY22, and its income from operations rose 84 per cent YoY to US$ 451.9 million.

Bottom line:

The OPEC+ decision has fuelled worries that it would further bump up energy prices while the global economy is already experiencing higher inflation and a slowdown in economic growth.

The decision to trim the production marks an attempt to bolster gain in the energy prices, which seemed to have cooled from their June highs. The WTI Crude Oil recently traded around US$ 85 per barrel, down from about US$ 120 in June start.

The recession concerns, due to higher rates and soaring prices, have already left investors in the cold, while the geopolitical turmoil has impacted global businesses. In addition to that, the higher food and energy prices have also contributed to the still-elevated inflation in recent months.

While the higher energy prices tend to be a positive catalyst for the oil and gas companies, it would weigh on the traders' sentiment, while cementing bets over a potential recession in the coming days.

Now, with the third quarter earnings season in focus, investors might keep a close track of the energy firms in the coming days. Notably, the S&P 500 oil & gas exploration and production index jumped over 30 per cent YoY and 43 per cent YTD. The S&P 500 energy sector added around 42 per cent YoY and over 46 per cent YTD.

On the other hand, the S&P 500 index was down over 19 per cent YoY and nearly 24 per cent YTD, confirming its place in a bear market territory.


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