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The energy sector is expected to see significant growth due to geopolitical tensions, supply constraints, and increasing global demand for natural gas and crude oil. Therefore, Enterprise Products Partners (EPD), Koninklijke Vopak (VOPKY), and VAALCO Energy (EGY), which are fundamentally strong energy stocks, may be worth adding to your portfolio. read.
The outlook for the energy sector appears optimistic, with oil prices expected to rise amid continued supply shortages, stable demand and geopolitical conflicts in the Middle East. Growth in the energy sector is being driven by a move towards renewable energy sources and technological improvements, which is likely to spur additional investment and innovation.
Given the positive outlook for the industry, investors are looking at Enterprise Products Partners LP (EPD), Koninklijke Vopak NV (Bopky), VAALCO Energy, Inc. (Egypt). Before we dive deeper into the fundamentals of these stocks, let’s understand what’s shaping the outlook for the energy sector.
Oil prices are rising due to rising tensions in the Middle East due to the protracted conflict in Gaza. Meanwhile, Iran has threatened to retaliate against Israel over the destruction of its consulate in Syria, helping to keep oil prices near six-month highs.
Concerns about the spread of the conflict to other countries in the region and the decision to continue OPEC+ oil supply cut Global production will be hampered through the first half of this year, potentially keeping oil prices high.In addition, Mexico’s crude oil exports will at least decline 330,000 barrels per day (bpd) May and Ukraine recent attacks Russian refineries are raising concerns about potential supply strains.
OPEC maintained its forecast for relatively strong growth in global oil demand in 2024, forecasting an increase in summer fuel use. In its monthly report, OPEC predicted that global oil demand will increase by 2024. 2.25 million barrels per day (bpd) in 2024 By 2025, it will increase to 1.85 million barrels per day.
The global oil and gas industry is expected to reach $65.8 billion by 2032 and is growing rapidly. CAGR 15.8%. Rising global energy demand and technological advancements, especially in emerging markets, are expected to propel the industry forward. Investors’ interest in energy stocks is reflected in the Energy Select Sector SPDR Fund (XLE) has returned 19.5% over the past three months.
With these positive trends in mind, let’s take a look at the fundamentals of some of the most popular energy stocks.
Enterprise Products Partner LP (EPD)
EPD provides midstream energy services worldwide, including natural gas processing, NGL fractionation, crude oil transportation, and petrochemical marketing. The company serves producers and consumers in various energy sectors with an extensive pipeline network and storage facilities.
On February 22, 2024, EPD announced that its affiliates have signed a definitive agreement to purchase a membership interest in Panola Pipeline Company, LLC from an affiliate of Western Midstream Partners, LP.
The acquisition of Panola Pipeline Company, LLC expands EPD’s footprint in the Permian Basin region and enhances its crude oil and natural gas liquids transportation and storage capabilities. This strategic move is consistent with his EPD’s goal of increasing its presence in key energy markets.
On February 21, 2024, EPD announced that certain of its affiliates acquired interests in Whitethorn Pipeline Company LLC and Enterprise EF78 LLC from Western Midstream Partners, LP.
These acquisitions expand EPD’s footprint in the Permian Basin and strengthen its position as the region’s leading midstream provider. The transaction is expected to strengthen EPD’s ability to provide integrated midstream services to customers in the region.
EPD’s trailing twelve month common stock return of 20.18% was 13.9% higher than the industry average of 17.72%.Similarly, the trailing 12 months of the stock price Return on total assets 7.79% is 16.7% higher than the industry average of 6.68%. Furthermore, the company’s trailing 12-month asset turnover ratio is 0.71x, which is 37.6% higher than the industry average of 0.52x.
EPD’s revenue for the fourth quarter ended December 31, 2023 was $14.62 billion, an increase of 7.1% from the same period last year. The company’s net income and adjusted EBITDA increased by 12.8% and 5.2% year over year to $1.6 billion and $2.5 billion, respectively. Adjusted operating cash flow increased 5.6% year over year to $2.22 billion.
Street expects EPD’s EPS and revenue to increase 4.9% year-over-year to $0.67 and 11.2% year-over-year to $13.84 billion, respectively, for the quarter ending March 31, 2024. Over the past nine months, EPD stock has increased 10.4%, closing at $29.22.
EPD power rating reflects this promising outlook. According to our unique rating system, the overall rating is “A”, which is equivalent to “Strong Buy”. POWR Ratings evaluates stocks by 118 different factors, each with its own weighting.
EPD has an A grade for sentiment and a B grade for growth, value, momentum, and stability. Within A rating MLP – Oil and Gas Ranked 5th out of 24 stocks in the industry. To check the EPD quality rating, click here.
Koninklijke Vopak NV (Bopky)
Headquartered in Rotterdam, Netherlands, VOPKY stores and handles liquid chemicals, gas and petroleum products for energy and manufacturing markets around the world. The company operates LPG and chemical gas, industrial, chemical and petroleum terminals, and owns and operates specialized facilities consisting of tanks, piers, truck loading stations and pipelines.
VOPKY’s trailing twelve month gross margin of 95.67% was 105.6% higher than the industry average of 46.53%. Net profit margin for the past 12 months was 31.67%, which was 141.2% higher than the industry average of 13.13%. Additionally, the trailing 12-month leveraged FCF margin of 9.50% is 42% higher than the industry average of 6.69%.
VOPKY’s revenue and EBIT for the fourth quarter of its fiscal year ended December 31, 2023 were €352.8 million ($382.88 million) and €150.2 million ($163 million), respectively. .
Net income attributable to owners of common stock and earnings per common share for the quarter were 109 million euros ($118.29 million) and 0.87 euros, respectively, an increase of 23.2% and 22.5% year over year. became.
VOPKY’s revenue for the fiscal year ending December 31, 2025 is expected to be $1.47 billion, an increase of 2.8% year over year. Shares have increased 21.1% over the past three months, closing the last trade at $39.99.
VOPKY’s strong fundamentals are reflected in its POWR rating. The overall rating is A, which equates to a “strong buy” according to our own rating system.
Ranked 6th out of 40 A-rated stocks. Foreign oil and gas industry. B grade for momentum, stability, and quality. click here To see additional ratings on VOPKY’s growth, value, and sentiment, visit
VAALCO Energy Co., Ltd. (Egypt)
EGY is an independent energy company with interests in Gabon, Egypt, Equatorial Guinea and Canada, focused on oil and gas exploration, development and production. The company’s assets include offshore mining interests in Gabon, concessions in Egypt, greenfield land in Equatorial Guinea, and production and operating interests in Alberta, Canada.
On March 25, 2024, EGY announced the completion of a joint management agreement for the Venus Block P development project in Equatorial Guinea and received government approval.
EGY has reached an important milestone in its development plans, including a front-end engineering design study that expanded its business portfolio and solidified its position in Equatorial Guinea’s energy sector.
EGY’s return on total equity for the trailing twelve months was 17.66%, which was 114.4% higher than the industry average of 8.23%. The trailing 12-month EBIT margin was 34.92%, which was 56.4% higher than the industry average of 22.33%. Additionally, his trailing 12-month leveraged FCF margin of 29.77% is 345.2% higher than his industry average of 6.69%.
EGY’s revenue for the fourth quarter ended December 31, 2023 was $149.15 million, an increase of 54.4% from the same period last year. The company’s adjusted profit increased 102.9% and 94.7% from the same period last year to $38.99 million, or $0.37 per share. Additionally, adjusted EBITDA increased 92.5% year-on-year to $95.88 million.
Analysts expect EGY’s revenue and EPS for the quarter ending March 31, 2024 to be $113.7 million and $0.25, up 41.4% and 257.1%, respectively, from the year-ago period. EGY stock has increased 77.9% over the past nine months, closing at $7.15.
It’s no surprise that EGY receives an overall B rating, which equates to a Buy on the POWR rating system.
It has a B rating for Growth, Value, Sentiment, and Quality. Ranked 3rd out of 83 stocks. Energy – oil and gas industry. In addition to the above, we also evaluated his EGY momentum and stability.Get all EGY ratings here.
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EPD stock was trading at $29.37 per share Friday morning, up $0.15 (+0.51%). Year-to-date, EPD has gained 13.59%, while the benchmark S&P 500 index has gained 8.71% during the same period.
About the author: Rashmi Kumari
Rashmi has a passion for capital markets, asset management, and financial regulatory issues, which led her to pursue a career as an investment analyst. With her Master’s degree in Commerce, she hopes to make complex financial issues easier to understand for individual investors and help them make good investment decisions.
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