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Oil stocks are publicly listed companies that operate in the oil and gas sector. The oil industry consists of the upstream, midstream, and downstream sectors. The upstream sector consists of the exploration and production of oil and gas. The midstream sector connects the upstream and downstream sectors via pipelines, tanks, terminals, and logistics. The downstream component refines, processes, and distributes finished oil and gas products.

The petrochemical sector is another critical component of oil stocks. Despite popular belief, many oil companies explore alternative energy solutions. They are active in natural gas and carbon capture. They have capital reserves, but oil and gas stocks must walk a fine line between maximizing existing infrastructure and transitioning to the future.

Why Should You Consider Investing in Oil Stocks?

Leading oil stocks can often offer a consistent, stable dividend yield. Despite the green energy transition, oil and natural gas are critical to the global economy. The pivot towards oil, natural gas, and nuclear power for US energy security has opened the door to a renaissance in oil stocks, especially those with an attractive natural gas portfolio.

Here are a few things to consider when evaluating oil stocks:

• The oil sector lacks long-term visibility due to the volatility of oil prices, making a low-cost business model vital.
• It may be wise to focus on oil stocks with a balanced combination of short-cycle and long-cycle investments.
• A well-diversified portfolio of oil and natural gas projects across global production hubs with excellent growth potential will ensure ongoing supply to meet surging demand.
• It may be wise to invest in oil companies with healthy dividend yields to compensate your portfolio for the volatility in oil prices.

What are the Downsides of Oil Stocks?

The volatility of oil prices and the movement towards carbon-neutral, pose long-term risks beyond 2035. However, the outlook over the next five to ten years remains excellent. Here is a shortlist of attractive oil stocks:

• ConocoPhillips (COP)
• Diamondback Energy (FANG)
• EOG Resources (EOG)
• Occidental Petroleum (OXY)
• Expand Energy Corporation (EXE)
• APA Corporation (APA)
• The Williams Companies (WMB)
• Northern Oil and Gas (NOG)
• Halliburton Company (HAL)
• MPLX LP (MPLX)

EOG Resources Fundamental Analysis

EOG Resources is an energy company engaged in the exploration of hydrocarbons. It has over 98% of its operations and reserves in the US, followed by Trinidad and Tobago, and negligible reserves in Canada and China. EOG Resources is exploring oil fields in Oman and the UAE. It is also a member of the Russell 2000 and the S&P 500 indices.

So, why am I bullish on EOG Resources ahead of its earnings release?

Shares are significantly undervalued, and I expect EOG Resources to beat revenue and earnings-per-share estimates, boosted by its Encino acquisition. I am bullish on the breakeven levels from oil production, which rank among the lowest in the energy sector, allowing EOG Resources to perform well even with oil prices at recent levels. I also look forward to upbeat guidance, and I am buying into the management team’s shareholder-first mentality.
 

EOG Resources Fundamental Analysis Snapshot

The price-to-earning (P/E) ratio of 10.23 makes EOG Resources an inexpensive stock. By comparison, the P/E ratio for the S&P 500 Index is at 30.97. The average analyst price target for EOG Resources is $137.13. This suggests excellent upside potential with manageable downside risks.

EOG Resources Technical Analysis

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EOG Resources Price Chart

The EOG Resources D1 chart shows the stock's price action between its descending 0.0% and 38.2% Fibonacci Retracement Fan levels. It also shows the stock within a horizontal support zone.

Additionally, the Bull Bear Power Indicator is bearish, but a positive divergence has formed.

My Call on EOG Resources

I am taking a long position in EOG Resources between $104.94 and $109.00. EOG Resources has deep roots in the Permian Basin, which continues to fuel energy companies, and I am bullish on its excellent reserves, advanced drilling technology, proprietary methods, and self-sourced materials.

Occidental Petroleum Fundamental Analysis

Occidental Petroleum is a hydro exploration and petrochemical company and a component of the S&P 500. It is unafraid to acquire assets to ensure its market position and diversify its assets. Occidental Petroleum is also at the forefront of investing in the cleaner extraction of fossil fuels.

So, why am I bullish on Occidental Petroleum ahead of its earnings release?

With expectations for a 49% drop in earnings per share, I am looking for a beat, as sentiment surrounding Occidental Petroleum is too negative. I am equally bullish on the strong institutional backing, which holds approximately 50% of the shares, and on the $9.7 billion sale of its chemical unit, OXYChem, which significantly reduced net debt, positioning it for future growth and shareholder returns.
 

Occidental Petroleum Fundamental Analysis Snapshot

The price-to-earnings (P/E) ratio of 23.94 makes Occidental Petroleum an inexpensive stock. By comparison, the P/E ratio for the S&P 500 Index is at 30.97. The average analyst price target for the stock is $49.91. This suggests strong upside potential with reduced downside risk.

Occidental Petroleum Technical Analysis

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Occidental Petroleum Price Chart

The Occidental Petroleum D1 chart shows the stock's price action below its ascending Fibonacci Retracement Fan. It also shows the stock within a massive horizontal support zone.

Additionally, the Bull Bear Power Indicator is bearish, but a positive divergence has begun to form.

My Call on Occidental Petroleum

I am taking a long position in the stock between $40.09 and $41.89. Occidental Petroleum strives to improve its debt-heavy balance sheet and benefits from a well-diversified portfolio and a thriving midstream business. Sentiment is too bearish, and I am buying at current support levels.

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