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Energy companies have come a long way since last year when the coronavirus pandemic had hit global oil demand massively. Economies are now reopening with more people socializing and going to work, brightening up the outlook for fuel demand.

The energy sector, as a whole, has gained significantly year to date and it is not too late to bet on such companies since some still have possibilities of further upside.    

Rebound in Oil & Gas Prices

The price of West Texas Intermediate (WTI) crude, trading at more than $71 per barrel mark, has improved drastically from the pandemic hit April last year when oil was in the negative territory. With coronavirus vaccines being rolled out at a massive scale, leading to gradual reopening of the economy, the demand for fuel will possibly improve further.

OPEC’s prediction of acceleration in global oil demand in the second half of 2021 reassures that the world is again demanding more oil, paving the way for further crude price recovery. In fact, the cartel believes that there will be shrinkage in the global oil glut since demand is accelerating. This outlook convinced OPEC to stick to its decision of gradually easing production cuts.

Like oil, the natural gas price has made a strong recovery. In the past year, natural gas price has jumped more than 108%. The price is likely to improve further since the expanding economic activities, thanks to the vaccination rollouts, will probably drive gas demand in commercial and industrial sectors.

Energy Stocks Rally

There are plenty of reasons for energy companies to rally further since economies are reopening gradually, driving fuel demand.  

However, it is really difficult to zero down on energy stocks that have the potential to gain even after a blistering run. Here, we have picked three stocks that have gained more than the energy sector year to date. Moreover, these companies are trading at a relatively cheap price and carry a Zacks Rank #1 (Strong Buy) or 2 (Buy). 

3 Stocks to Buy

Earthstone Energy, Inc. (ESTE Quick Quote ESTE - Free Report) has skyrocketed 99.6% year to date as compared with the energy sector’s improvement of 27.7%. Moreover, on the basis of the trailing 12-month enterprise value-to EBITDA (EV/EBITDA) ratio, the company is currently trading at 5.05X versus the sector’s 5.8X.

Thus, considering its relatively inexpensive valuation, the #2 Ranked company – having a strong footprint in the Midland basin of west Texas and the Eagle Ford trend of south Texas – still has room to run.

Year-to-Date Price Performance

Image Source: Zacks Investment Research

Current Valuation: ESTE

Image Source: Zacks Investment Research

SilverBow Resources, Inc. (SBOW Quick Quote SBOW - Free Report) has witnessed its stock price surge 348.2% year to date. Moreover, on the basis of the trailing 12-month enterprise value-to EBITDA (EV/EBITDA) ratio, the upstream company is currently trading at 4.88X.

Thus, with the stock trading at a relatively cheap price, the Zacks #1 Ranked firm – having a strong presence in the Eagle Ford Shale in South Texas – has room to gain more. 

Current Valuation: SBOW

Image Source: Zacks Investment Research

PetroChina Company Limited (PTR Quick Quote PTR - Free Report) has jumped 48.9% year to date. Moreover, on the basis of the trailing 12-month enterprise value-to EBITDA (EV/EBITDA) ratio, the integrated energy company is currently trading at 2.48X.

Thus, considering its relatively inexpensive valuation, the #2 Ranked company – a strong player in the oil and gas industry in China – has plenty of room to run.

Current Valuation: PTR

Image Source: Zacks Investment Research