2 Energy Stocks To Buy In September, 2 To Avoid

According to the data released by the Energy Information Administration, fuel demand has reached its highest level since March 2020, propelling oil prices to a 10% gain last week. Furthermore, Hurricane Ida is expected to keep crude and retail gasoline prices elevated as refineries remain shut across the region. Consequently, analysts estimate gasoline prices will rise 5 -10 cents per gallon by the Labor Day weekend.

Thus, we think fundamentally sound energy stocks Cimarex Energy Co. (XEC - Get Rating) and National Fuel Gas Company (NFG - Get Rating) could soar in price in the near term. 

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However, the resurgence of the COVID-19 cases is expected to make oil prices volatile in the near term. Thus, we recommend avoiding fundamentally weak energy stocks EQT Corporation (EQT - Get Rating) and U.S. Energy Corp. (USEG - Get Rating).

Stocks to Buy:

Cimarex Energy Co. (XEC - Get Rating)

XEC is an  independent oil and gas exploration and production company that operates primarily in Texas, Oklahoma, and New Mexico. It is headquartered in Denver, Colo.

On August 31, XEC declared a $20.3125 per share dividend on its 8⅛%Series A cumulative perpetual convertible preferred stock. The dividend is payable on October 15, 2021.

XEC’s revenues increased 185.7% year-over-year to $712.38 million in its  fiscal second quarter, ended June 30. Its operating income grew 113.5% from its  year-ago value to $159.91 million, while its net income improved 112.3% year-over-year to $113.39 million. The company’s EPS increased 111.9% year-over-year to $1.10.

Analysts expect XEC’s revenues to increase 92.7% year-over-year to $749.89 million in the current quarter, ending September 2021. The $2.66 consensus EPS estimate for the current  quarter indicates a 421.6% rise from the same period last year. Shares of XEC have gained 126.9% in price over the past year and 74.8% year-to-date.

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Mark Walla 2 weeks ago Member's comment

What's the point of comparing $5-$7 billion market cap O&G names to $20 million USEG?