3 Energy Stocks Gaining from Oil Price Volatility

The global energy market has taken a hit as the conflict in the Middle east pertains and continues to run free without an end in sight. Even with a curbing of oil supply by the OPEC+ creating price volatility, the energy sector remains resilient about its future.

Amid this backdrop, investors could scoop up shares of fundamentally stable energy stocks, Suncor Energy Inc. (SU), DNOW Inc. (DNOW), and MRC Global Inc. (MRC). Even with a grim short-term outlook, these stocks are well positioned to capitalize on the growing energy demand.

The Israel-Hamas conflict has deeply impacted the global oil supply chain, creating ripples across markets. Compounding this disruption, OPEC+ recently deferred its planned easing of production cuts from December 2024 to January 2025. The shift has intensified concerns about supply stability, further unsettling an already volatile energy market.

Despite these uncertain conditions, OPEC and the International Energy Agency (IEA) remain confident about the state of global gas demand for the coming years. OPEC forecasts robust medium-term growth in oil demand, expecting it to reach 112.3 million barrels per day by 2029 and an overall growth of 24% in global energy demand.

On the other hand, the IEA anticipates a global demand for natural gas to rise more than 2.5% in 2024, with similar growth projected for 2025. These optimistic stances on the global energy market creates a thriving ground for energy stocks to breathe, even in the face of oil price volatility.

So, let us dive deep into the fundamentals of three energy stocks, starting with #3.

Stock #3: Suncor Energy Inc. (SU)

Headquartered in Calgary, Canada, SU is an integrated energy company that explores, develops, and produces bitumen, synthetic crude oil and refines crude oil products. It functions three segments: Oil Sands; Exploration and Production; and Refining and Marketing.

On March 7, SU announced the signing of a memorandum of understanding with Fort McKay First Nation on a prospective oil sands lease development opportunity on Fort McKay reserve lands in the Regional Municipality of Wood Buffalo and respectively Fort McKay First Nation Traditional Territory.

The development is expected to strengthen SU’s bitumen portfolio and unlocks bitumen supply post 2040 for the company, enhancing its long-term growth.

For the fiscal 2024 third quarter that ended September 30, SU’s net earnings and net earnings per common share increased 30.8% and 33.6% year-over-year to CAD $2.02 billion ($1.41 billion) and CAD $1.59, respectively. Its adjusted operating earnings came in at CAD $1.88 billion ($1.31 billion).

Additionally, SU’s adjusted funds from operations and adjusted funds from operations per common share grew 4.2% and 6.4% from the prior year’s quarter to CAD $3.79 billion ($2.66 billion) and CAD $2.98, respectively.

Analysts expect SU’s revenue and EPS for the fiscal year ending December 2024 to come in at $35.95 billion and $3.68, respectively. Moreover, the company surpassed the consensus EPS estimates in all of the trailing four quarters, which is noteworthy.

Shares of SU have surged 15.9% over the past year, closing the last trading session at $35.84.

SU’s POWR Ratings mirror its fundamentals. SU has an A grade for Quality and a B for Stability and Momentum. The POWR Ratings are calculated by taking into account 118 different factors, with each factor weighted to an optimal degree.

SU is ranked #13 out of 76 stocks in the Energy - Oil & Gas industry. In addition to the POWR Ratings highlighted above, you can check SU’s ratings for Value, Sentiment, and Growth here.

Stock #2: DNOW Inc. (DNOW)

DNOW is a distributor of downstream energy and industrial products for petroleum refining, chemical processing, LNG terminals, power generation utilities, and customer on-site locations. It offers consumable maintenance, repair, and operating supplies; pipes, manual and automated valves, fittings and more.

On November 26, DNOW announced an all-cash acquisition of Trojan Rentals, LLC, a provider of pump rentals, automation technology and more. The acquisition strengthens DNOW’s water management solution offerings through Trojan’s automation portfolio and helps equip the company with the required portfolio to meet the growing demand of complex water management.

On March 12, DNOW announced the all-cash acquisition of Whitco Supply, LLC, an energy products and solutions company. This acquisition is expected to strengthen DNOW’s position in midstream, E&P, and adjacent markets and unlock its growth prospects in the aforementioned markets.

For the fiscal third quarter that ended September 30, 2024, DNOW’s revenue increased 3.1% year-over-year to $606 million. Its EBITDA excluding other costs was reported to be $42 million.

Additionally, non-GAAP net income attributable to DNOW excluding other costs and EPS attributable to DNOW stockholders excluding other costs came in at $22 million and $0.21, respectively.

Street expects DNOW’s revenue for the fiscal year ending December 2024 to increase 1.5% year-over-year to $2.36 billion. Meanwhile, its EPS for the ongoing fiscal year is expected to come in at $0.80. In addition, the company surpassed the consensus EPS estimates in three of four trailing quarters.

DNOW’s shares have surged 7.7% over the past three months and 25% over the past year to close the last trading session at $13.80.

DNOW’s solid prospects are projected in its POWR Ratings. The stock has an overall rating of B, which translates to a Buy in our proprietary rating system.

DNOW has a B grade for Value and Quality. Within the Energy – Services industry, it is ranked #8 out of 53 stocks.

Click here to see DNOW’s ratings for Growth, Momentum, Stability, and Sentiment.

Stock #1: MRC Global Inc. (MRC)

MRC is a distributor of pipes, valves, fittings, and other infrastructure products and services. The company offers diaphragm, needle, and plug valves, lined corrosion resistant piping systems, control valves, valve automation, valve modification services and more.

On June 13, MRC’s subsidiary, MRC Global (US) Inc. announced the signing of an agreement with Exxon Mobil Corporation (XOM) to provide pipe, valves and fitting (PVF) products and services to XOM in North America.

The agreement is expected to boost MRC’s income streams and establish a stronger market presence within the energy industry.

For the fiscal 2024 third quarter that ended September 30, MRC’s sales came in at $797 million. Its adjusted gross profit was reported to be $166 million. The company’s adjusted EBITDA stood at $48 million. Moreover, adjusted net income and adjusted net income attributable to common stockholders amounted to $19 million and $0.22, respectively.

The consensus revenue and EPS estimates of $3.20 billion and $1.09 for the fiscal year ending December 2025 reflect a year-over-year rise of 1.1% and 32.4%, respectively. Furthermore, the company topped the consensus EPS estimates in all of the trailing four quarters.

The stock has surged 6.9% over the past six months and 23.8% over the past year to close the last trading session at $13.18.

MRC’s POWR Ratings reflect its robust outlook. The stock has an overall rating of B, equating to a Buy in our proprietary rating system.

MRC has an A grade for Value and Sentiment. Within the Energy - Services industry, MRC is ranked #5 out of 53 stocks.

To see the stock’s ratings for Growth, Momentum, Stability, and Quality, click here.

What To Do Next?

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SU shares rose $0.16 (+0.45%) in premarket trading Wednesday. Year-to-date, SU has gained 16.79%, versus a 28.33% rise in the benchmark S&P 500 index during the same period.

Aanchal's passion for financial markets drives her work as an investment analyst and journalist. She earned her bachelor's degree in finance and is pursuing the CFA program. She is proficient at assessing the long-term prospects of stocks with her fundamental analysis skills. Her goal is to help investors build portfolios with sustainable returns.

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