CCJ - 7 High-Growth Energy Stocks Ready to Explode

2024-07-11 06:00:00 ET

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While the ideological machinery is seemingly focused on zero emissions, don’t be mistaken: the world is consuming energy-related resources at a blistering pace. This situation will likely only be exacerbated with global population growth combined with advanced technologies like artificial intelligence. Oh yeah, none of these developments are for “free.” Therefore, high-growth energy stocks make a lot of sense.

I don’t even consider such a framework to be cynical, although I suppose it could be framed that way. Rather, we’re just dealing with logical deductions. More people, more power-hungry technologies, more resource consumption – it really is that simple. And that’s not to slight green infrastructure development. It’s just that we need all the help we can get.

What does that mean? Well, fossil fuels, nuclear power, even coal will likely be relevant in the years ahead. It also helps in the meantime that the Republicans have a clear shot to gaining serious political power. They’re not exactly anti-hydrocarbons. With that in mind, below are high-growth energy stocks to consider.

Chevron (CVX)

When it comes to green solutions, Chevron (NYSE: CVX ) isn’t exactly perched at the top of the list. However, when it comes to high-growth energy stocks, CVX deserves consideration. Sure, it’s a major player in the oil and gas integrated industry. Indeed, it’s one of the world’s supermajors. Nevertheless, shifting political tides bode well for the company.

Admittedly, the company has come across some challenges. In the past four quarters, Chevron’s average earnings per share landed at $3.07. However, analysts were expecting on average $3.15 during the same period. That led to a negative earnings surprise of 1.4%. Still, the Republicans are likely moving into power, which could lead to a hydrocarbon bonanza.

Another factor is that geopolitical turmoil could disrupt global oil supply chains in Europe and the Middle East. I imagine chaos would be the order of the day given former President Donald Trump’s ultracrepidarian perspectives on global affairs.

I also imagine analysts recognize this. Therefore, CVX is a consensus strong buy with a $186.21 price target, implying nearly 22% upside.

Diamondback Energy (FANG)

Based in Midland, Texas, Diamondback Energy (NASDAQ: FANG ) operates in the hydrocarbon exploration and production segment. This is also known as the upstream component of the oil and gas value chain. An independent enterprise, Diamondback acquires and develops unconventional, onshore oil and natural gas reserves in the Permian Basin (located in West Texas).

Geopolitically, the threat of oil supply chain disruptions could boost upstream entities located in friendly jurisdictions. It doesn’t get much friendlier than here at home. Further, a future Trump administration will likely bolster FANG through approval of various hydrocarbon initiatives. Therefore, the immediate horizon looks bright for Diamondback, making it one of the high-growth energy stocks.

In the trailing 12 months (TTM), the company posted net income of $3.18 billion or $17.73 per share. Revenue hit $8.27 billion in the cycle. For fiscal 2024, analysts anticipate nearly 6% expansion in EPS to $19.08. On the top line, revenue could rise 9% to $9.17 billion. Also, by fiscal 2025, we could see gargantuan growth to $15.8 billion in sales.

Cheniere Energy (LNG)

Headquartered in Houston, Texas, Cheniere Energy (NYSE: LNG ) falls under the oil and gas midstream segment. This area of the hydrocarbon industry deals primarily with storage and transportation. As you might guess from the ticker symbol, Cheniere specializes in liquefied natural gas or LNG. It’s always been relevant because LNG is a critical commodity. However, demand for it could rise.

Geopolitically, Russia is a major provider of global LNG. It’s also providing something else in the way of military belligerence. And that’s where circumstances get tricky because of the (likely) incoming Trump administration. European leaders generally have a drastically different view of the world than that of “MAGA” Republicans. One can imagine friction if not outright chaos in the European theater.

With that in mind, Cheniere is a higher-risk entity. Still, I also believe that it’s one of the high-growth energy stocks to consider. Yes, on paper, analysts are targeting a 22.2% decline in sales to $15.86 billion this year compared to last. Still, the great need for LNG now that Russia is effectively off the table for western nations could boost Cheniere’s share price.

Permian Resources (PR)

Also operating in the hydrocarbon exploration and production segment, Permian Resources (NYSE: PR ) is an independent oil and natural gas company. It focuses on the development of crude oil and related liquids-rich natural gas reserves in the U.S. Its main area of operation is on the Delaware Basin, which is a sub-basin of the famous Permian.

Financially, the company has encountered some choppy weather in the second and third quarters of last year. During that time, the company’s EPS was well below expectations. However, the performance picked up in the last two quarters. Overall, in the trailing year, Permian managed an average EPS of 32 cents. That said, it did slip below the target of 35 cents.

In the TTM period, Permian posted net income of $520.76 million or $1.18 per share. Revenue hit $3.75 billion and is on a growth trek. Enticingly, analysts anticipate a 32.26% bump in EPS to $1.64 by the end of this year. More impressively, revenue could soar almost 65% to $5.14 billion. Therefore, PR makes a compelling case for high-growth energy stocks.

Cameco (CCJ)

When discussing high-growth energy stocks, it doesn’t make sense to just talk about hydrocarbons although that’s naturally where the focal point is. At this juncture, it also makes sense to consider nuclear energy, which brings us to Cameco (NYSE: CCJ ). Primarily, Cameco is involved in the exploration, mining, milling, acquisition and distribution of uranium concentrate (also known as yellowcake).

Uranium of course carries indirect controversies due to fallout concerns. However, because the tech ecosystem has thrown (seemingly) its full weight into AI, nuclear cannot be ignored. The power consumption is too great. And as Goldman Sachs recently suggested, the productivity gains are not yet worth the costs . However, the machinery just keeps moving forward, which means more consumption will be on the horizon.

That’s a problem for society but a potential godsend for the uranium industry. As one of the leaders in the space, Cameco should benefit. Yes, its earnings performances in the past year have not been quite up to snuff. Nevertheless, that could change in the years ahead.

For fiscal 2024, analysts see EPS expansion of almost 32% to 75 cents. The top line could rise 17.5% to $2.22 billion. It’s one of the high-growth energy stocks to keep on your radar.

Peabody Energy (BTU)

Switching gears yet again, let’s talk about Peabody Energy (NYSE: BTU ). Falling under the thermal coal industry, Peabody Energy engages in the coal mining business in the U.S. and several other countries, including Japan, India, Brazil and France, to name but a few. To be sure, coal doesn’t exactly seem relevant in the current century. Yet it could make a comeback.

Let me be clear: BTU stock represents a high-risk, questionable-reward opportunity. However, I’m putting it out there because of the math. Essentially, you have the perfect storm of global population growth, burgeoning technologies like AI and the worldwide distribution of said technologies. All that stuff isn’t free and it mainly comes at the cost of energy consumption.

So, hug a tree if you like. But the reality is that we probably require all the energy resources we can get. That may very well include coal. So, I understand that Peabody has been an earnings underperformer. It doesn’t look good in that context. As well, analysts project erosion in the business over the next two years.

But with Trump likely to be our next president (because President Biden is stubborn), I think BTU deserves a rethink.

Matador Resources (MTDR)

Based in Dallas, Texas, Matador Resources (NYSE: MTDR ) is another upstream specialist. An independent outfit, Matador focuses on the exploration, development, production and acquisition of oil and natural gas resources. Primarily, it operates in the hydrocarbon-rich regions of Southeast New Mexico and West Texas. Given its domestic focus, the coming political shift bodes well for MTDR stock.

A key factor to consider is the company’s financial prowess. In the past four quarters, Matador’s EPS averaged $1.75. That beat out the estimate calling for $1.56 during the same period. Overall, the average earnings surprise came out to 11.53%. That’s a very solid showing considering that some hydrocarbon players encountered choppy weather.

Notably, MTDR stock trades at 6.96X forward earnings, a modest premium to the 6.63X multiple that it printed over the past year. Further, the market prices shares at 2.31X trailing-year revenue. That’s below the past-year average of 2.36X.

Why is that important? Analysts project that by year’s end, EPS could rise 15.36% to $7.81. The top line could bump up 24.4% to $3.49 billion. In the following year, EPS could hit $9.38 on sales of $4.19 billion. It’s a compelling idea for high-growth energy stocks.

On the date of publication, Josh Enomoto did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines .

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