Zacks Investment Ideas feature highlights Solaris Oilfield Infrastructure SOI, Helix Energy Solutions Group HLX and Murphy USA MUSA.

Energy Is Leading Again: 3 Top-Ranked Stocks to Buy Now

After leading the market in 2022, and then lagging for most of this year, energy stocks are again back in favor as oil prices rallied 15% in the last month. Not surprisingly, energy has been the strongest sector in the market over the last month.

Additionally, several promising energy stocks have now jumped to the top of the Zacks #1 Rank list, indicating upward trending earnings revisions, and boosting near term expectations.

Solaris Oilfield Infrastructure, Helix Energy Solutions Group and Murphy USA all boast Zacks Rank #1 (Strong Buy) ratings, are showing strong near-term momentum, and should see considerable increases to their bottom-line profits with higher oil prices.

Helix Energy Solutions Group

Helix Energy Solutions Group is an international offshore energy company that provides specialty services to the offshore energy industry, with a focus on their growing well intervention and robotics operations. Their Contracting Services seek to provide services and methodologies which they believe are critical to developing offshore reservoirs and maximizing production economics.

HLX seeks to align the interests of the producer and the contractor by investing in mature offshore oil and gas properties, hub production facilities and proven undeveloped reserve plays where Helix Energy Solutions Group adds value by deploying vessels from its diverse contracting fleet. This unique integration of marine contracting and oil and gas operations is designed to add stability to revenues and earnings in an industry as cyclical as energy.

HLX stock has put on an impressive performance over the last year, well outperforming the industry and broad market.

Because of dynamics in the energy market, namely the lack of new exploration and infrastructure projects, HLX is in an advantageous position. Over the last year and still currently today, oil companies are more focused on optimizing production of their wells, which is exactly what Helix Energy Solutions Group specializes in.

This has provided a major boon for business and annual sales have nearly doubled in the last two years after stagnating for several years.

Sales for the current quarter and FY23 are projected to continue the trend of growth. Current quarter sales are expected to climb 35% YoY to $368 million, and FY23 sales are expected to increase 45% YoY to $1.27 billion.

Earnings too are expecting huge YoY growth. Current quarter earnings estimates forecast a 290% YoY increase in EPS from -$0.10 to $0.19. FY23 earnings estimates are expected to flip from -$0.48 to $0.48 per share.

Helix Energy Solutions Group is trading at a one-year forward earnings multiple of 20.8x, which is above the industry average of 15.6x, and below its 10-year median of 25.1x.

Solaris Oilfield Infrastructure

Solaris Oilfield Infrastructure manufactures and provides patented mobile proppant management systems which unload, store, and deliver proppants at oil and natural gas well sites. Proppant is a solid material, typically sand, treated sand or man-made ceramic materials, designed to keep an induced hydraulic fracture open, during or following a fracturing treatment.

Its systems are deployed in many of the most active oil and natural gas basins in the United States, including the Permian Basin, the Eagle Ford Shale, and the SCOOP/STACK formation.

After dealing with some challenging price action earlier in the year SOI has rallied back and is now positive on the year. It also broke above a critical level of resistance and is building a technical pattern that could launch the stock considerably higher.

If SOI stock can breakout above the $10.70 level, it should make another new yearly high. Alternatively, if the stock can’t hold above the $10.25 level, the setup is invalid, and investors will want to wait for another opportunity.

Like the other two stocks, Solaris Oilfield Infrastructure has a Zacks Rank #1 (Strong Buy) rating, indicating upward trending earnings revisions. Current quarter earnings estimates have been revised higher by 10% to $0.22 per share. FY223 earnings estimates have been upgraded by 10.5% and are projected to grow 25% YoY to $0.95 per share.

Murphy USA

Murphy USA is a leading independent retailer of motor fuel and convenience merchandise in the United States. The El Dorado, AR-based company, in its current form, came into existence following the 2013 spin-off of Murphy Oil Corporation’s downstream business into a separate, independent and publicly traded entity.

Murphy USA markets refined products through a chain of retail stations, almost all of which are located near a Walmart supercenter, primarily in the Southeast, Southwest and Midwest United States.

As of Dec 31, 2022, the company had more than 1,700 retail fuel stations across 27 states.

MUSA stock has been an exceptional performer over the last decade, compounding at an annual rate of 22.7%, and hugely outperforming both the industry and broad market.

With current quarter earnings estimates being revised 10% higher over the last two months, and FY23 earnings estimates getting upgraded by 6.5%, Murphy USA has deservingly gained a Zacks Rank #1 (Strong Buy) rating.

MUSA is trading at a one-year forward earnings multiple of 14.6x, which is below the market average of 21.5x, and below its 10-year median of 16.5x. Additionally, Murphy USA offers a dividend yield of 0.5%, which has been raised by an average of 21% annually over the last five years.

Conclusion

If you missed last year’s oil run, you may be getting another opportunity to profit. So long as oil prices remain elevated, and investors focus on buying top ranked stocks there will be plenty of chances to make some money this year.

Murphy USA Inc. (MUSA): Free Stock Analysis Report

Helix Energy Solutions Group, Inc. (HLX): Free Stock Analysis Report

Solaris Oilfield Infrastructure, Inc. (SOI): Free Stock Analysis Report

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