3 best energy stocks to buy now – The Motley Fool

The big find of today in the energy space could be the madness of tomorrow. With energy prices constantly changing – and the energy landscape itself changing – it's hard to know what will outperform among energy stocks.

Keeping this in mind, we approached three of our Motley Fool contributors and asked them what energy stocks, in their opinion, were worth buying at the moment for investors who did not fear a little risk in their wallet. They have chosen earthling (NASDAQ: TELL), TPI Composites (NASDAQ: TPIC), and Western Oil (NYSE: OXY). Here's why, despite the risks, they think these stocks could be good investments.

Lots of potential if things go as planned

Tyler Crowe (tellurian): 2019 will be the year in which we will wonder if Tellurian will keep its promises of being an incredible investment opportunity. The company wants to build a major liquefied natural gas (LNG) export facility on the US Gulf Coast. It all boils down to a few decisions this year that will determine how much investors will get by with this speculative title.

The basic idea of ​​how Tellurian will earn money is certainly there. Natural gas production in the United States is expected to increase significantly and the price of this gas in the United States is well below world reference prices. In some shale basins like the Permian, natural gas production far outweighs treatment capacity and processing capacity, to the point that some producers will pay to have it removed instead of burning it at the wellhead. With cheap and abundant gas, LNG exporters have the opportunity to get killed. Tellurian estimates that at current gasoline prices in the United States and abroad, it will generate approximately $ 8.55 per share in annual cash flow, more than current prices.

Tellurian has already received all the permits it needs from regulators and is now looking to convince some of the commercial partners to help finance the construction of the facility. The company plans to make a final investment decision later this year. Tellurian will still encounter many challenges on the way forward, which could make this title less attractive, but if things go as planned, investors might consider a multibagger.

A high risk chance of owning 25% of the wind energy market

Rich Smith (TPI Composites): I'll tell you right now: I'm more than a little nervous about making this call today. That being said, I will always stand aside and recommend the TPI Composites wind turbine manufacturer as a first-rate energy stock to buy right now, with "right now" defined as "before 2020 ".

Why am I nervous and why is it still the right call to make? Take TPI's latest quarterly report, which my colleague from Fool.com, Neha Chemaria, presented to us earlier in May. Sales rose 18% in the first quarter of 2019 and billings increased 25%, indicating continued strong demand for wind energy. Management predicted that TPI would double its revenues to $ 2 billion annually by 2021, and could hold up to 25% of the turbine blade market share.

At the same time, however, a combination of commodity shortages, labor strikes in Mexico and a bankrupt customer prevented TPI from making a flawed estimate in the first quarter, the Leading to report a loss of $ 0.35 per share and to reverse a profit promised for the 2019 financial year. To predict instead of $ 0.09 per share loss.

So where is the opportunity in all this? 2019 announces it as another lousy year for TPI, and the stock price – down 18% over the previous year, to establish at $ 22 l & # 39, action – testifies to this. following However, analysts predict that TPI will rebound each year on earnings per share of $ 2.20, which corresponds to a P / E ratio of 10 for current stock. For a stock indexed to an annual growth rate of 35% over the next five years, it seems like being a very cheap price.

Yesthat is, profits return next year as promised.

Worth a visit after a beating

John Bromels (Occidental Petroleum): Sometimes this does not seem like the right time to buy a business. And right after a company signed an important contract that left investors and analysts wondering what they thought. thinking? "Probably one of those opportunities, but in keeping with these riskier choices, it may be time to take a few shares of Occidental Petroleum.

Occidental has just defended himself Chevron in a bidding war to buy Anadarko Petroleum (NYSE: APC)but maybe it's a Pyrrhic victory. While Chevron offered $ 62 a share for Anadarko, which was already a premium for the price below $ 50 a share Anadarko, Occidental has submitted an offer of $ 76 per share, which many people think too expensive. . To make this offer, Occidental had to get funding from Warren Buffett, and that was not cheap.

The Western stock price has fallen 25% since April, while all of this has been played, and investors have said they are not happy with the deal. But this punch has reduced its valuation to only 9.3 times the profits, a minimum in 10 years. It also increased its dividend yield to 6.3%. Occidental is certainly worth taking into account.

And it's not like Western has nothing to gain. Anadarko is one of the largest producers in the Permian Basin and, as several middle-market players are working hard on pipelines and export terminals to move oil and gas from the Permian to the Middle East. market, this great Permian position could be very profitable for investors who are buying now. But I repeat that this is not a slam dunk and that there is a lot of risk if, for example, oil prices enter a new sustainable crisis or if the infrastructure of the Permian promised does not materialize as expected.

But for now, even if it seems to be overpaid for Anadarko, Occidental Petroleum could itself be oversold.