Neither the author, Tim Fries, nor this website, The Tokenist, provide financial advice. Please consult our website policy prior to making financial decisions.
Investing in the energy sector can be rather tricky as the fortunes of various stocks tend to rise and fall based on many factors, such as the current political climate and demand. These uncertain times make an investment even more trickier, but there are, however, still very beneficial opportunities within the space. Here are some of the best energy stock to invest in for July 2020.
What are the Best Energy Stocks for July 2020?
The following stocks have been able to weather the storm of COVID-19. As the global energy sector looks to recover in the coming months, they could see a significant spike in value.
While COVID-19 caused an initial stock market crash, it didn’t last very long. Especially when compared to previous epidemics.
A subsequent surge of millennial-powered day trading brought the market right back to where it had been. From the best growth stocks, to pharmaceutical working on a COVID-19 vaccine, millennials have found plenty of options.
Here, we break down the best energy stocks for the month of July 2020.
Chevron is one of the biggest companies in the energy space, with a large portion of its profits coming from oil sales. When COVID-19 occurred earlier this year, many companies in the energy sector saw their profits decline, and so did Chevron. In fact, their stock took a 25% dip in value.
However, this was actually beneficial as many of their contemporaries recorded stock declines of between 35 and 50%. This means that compared to its peers, Chevron has fared better amidst the pandemic. This is besides the fact that the company has seen all-around growth.
In the first quarter of 2020, Chevron reported a 35.5% growth in its net income. This was due to their sales of upstream assets as well as positive foreign currency effects worth $514 million. Now that movement restrictions across many countries are being lifted, the demand for oil is expected to increase once again, and this could mean that the price of Chevron’s stock will increase.
With their performance before and during the pandemic, as well as the potential end of lockdown, Chevron might be a good energy stock option for July.
2. Cabot Oil & Gas Corp (NASDAQ:COG)
The company, since 2016, has been taking conscious steps to divest itself from the oil sector and has since focused more on natural gas. In light of the current decline in oil demand in the wake of COVID-19, this has turned out to be an advantageous move on their part. However, the company has not been unaffected by the current situation.
The first quarter saw the company report a decline in both net income and operating revenue. The former saw a 79.5% decline while the latter saw a 39.8% decline. This was coupled with a weak demand for natural gas and an oversupply of it.
However, it is expected that the demand for natural gas, just like oil, will pick up as lockdown measures end. These factors could mean that its earnings per share, which is currently in decline, might recover in the long run.
3. Valero Energy Corp (NASDAQ:VLO)
Valero Energy specializes in the production of petroleum-based products such as gasoline, distillates, jet fuel, asphalt, petrochemicals, lubricants, and so on. Seeing as the refining of petroleum products contributes 95% of the company’s income, it has been hit hard by the pandemic. As of now, its stock price is the lowest that it has been in the last three years.
Despite this, the company’s stock price has shown some signs of recovery. Also, the company currently has a 5.8% yield, which can be credited to its increasing dividends. Like many companies in the energy sector, it is possible that their fortunes will increase as the world returns to normal.
If you are looking to invest in the energy sector now that stock prices are cheaper and then cash out in the future, Valero Energy Corp might be a good option.
Conclusion: The Energy Sector and COVID-19
The fortunes of the energy sector are often dictated by factors outside our control, such as the pandemic. However, the data available indicates that the above stocks could be good investments to make. If you are looking for stocks to buy with a second stimulus check, these might be a good choice.
Before you begin investing, however, we recommend that you conduct as much research as possible. Also, take advantage of the many resources and apps at your disposal.
Not sure where to start buying and selling stocks? Review our top stock apps report.