There are several energy stocks to buy in 2022 that can help you build your diverse portfolio. Through this article, we are trying to help you with how to analyze the best energy stocks to buy and provide the top energy stocks you can tap to explore this sector with significant profit opportunities. But here, a question arises – Why invest in energy stocks?
You may get various complex answers to this question, but the answer is simple. To diversify your portfolio! Yes, the only core reason to invest in a different sector is to make your portfolio more diversified. Now, by diversification, you will have opportunities to prevent your losses by hedging against stocks of other sectors in events like market crashes.
Another reason to invest in energy stocks is that this industry has enormous potential to flourish in the coming decade. Following the climate change protests in various nations, the energy sector companies are going to come up with new technologies that would serve solutions such as producing electricity in an efficient way and more.
The current Electric Vehicle (EV) revolution would also feed massive opportunities in the energy sector in this decade.
So let’s discuss each energy stock that could be the best buy for 2022.
Top 8 Energy Stocks to Buy in 2022
1. Exxon Mobil Corporation (XOM)
Exxon Mobil had a challenging year in 2020 but has been on the mend since November. However, demand concerns related to the COVID-19 shutdowns and the consequent oil supply excess caused its stock price to plummet by more than half.
Despite the fact that Exxon Mobil’s stock was down due to low oil prices, the corporation demonstrated financial fortitude by continuing to pay dividends to shareholders throughout the COVID crisis. As a result, the stock has one of the best dividend payouts in the industry, with a current yield of well over 5%.
Exxon Mobil is one of the world’s leading carbon capture and storage (CCS) companies. Carbon capture technology has the ability to collect over 90% of CO2 emissions from the use of fossil fuels in energy production, making energy production a considerably cleaner process in the end.
The current share price of XOM is $60.99, with a market cap of $256.13 billion.
2. Enphase Energy Inc. (ENPH)
Enphase, based in California, is a renewable energy firm. It is the world’s top manufacturer of solar-plus-storage systems based on micro inverters. It also provides sophisticated, user-friendly solutions that link solar generating, storage and energy management on a single intelligent platform.
In addition, the company’s semiconductor-based microinverter system converts energy at the level of individual solar modules, improving efficiency.
The current share price of ENPH is $189.33, with a market cap of $25.50 billion.
3. Chevron Corporate (CVX)
Chevron is another well-known name in the energy sector, as one of the largest gas firms in the United States. The corporation, which is best known for its enormous chain of gas stations, is among the top in the energy sector, ranking alongside Exxon. In addition, the corporation has long been involved in the production of crude oil, LNG, and refined fuels.
The firm produces biofuels from its feedstocks and collaborates with a number of biofuel technology companies. In addition, the corporation is researching solar solutions at three distinct locations in California.
Chevron has no plans to abandon its primary oil sector. However, when it comes to future energy consumption needs, it is heavily preparing for the world of clean energy. While investing in renewable energy infrastructure, the firm also continues to reward shareholders with a high dividend yield.
The current share price of CVX is $116.13, with a market cap of $222.60 billion.
4. Lucid Group Inc (LCID)
Electric vehicles are another exciting option to play the renewable energy revolution, mainly because the sector is still in its infancy. Lucid Group stands out as a firm with a great chance of capturing market share in the electric vehicle area, despite the fact that it still has a long way to go before being profitable.
The Lucid Air is the company’s first vehicle, and it is aimed at luxury automobile fans. Lucid just reached a significant milestone when it announced the first confirmed deliveries of the Air luxury vehicle, and the stock price has risen as a result.
With worldwide EV sales rapidly expanding, there’s lots of potential for a firm like this to develop, which is why it’s another interesting sustainable energy selection.
The current share price of LCID is $38.70, with a market cap of $63.71 billion.
5. Kinder Morgan (KMI)
Kinder Morgan is one of the world’s primary energy infrastructure firms. Despite the fact that the corporation does not manufacture crude oil, liquid natural gas, or other traditional energy products, it is critical in their transportation and storage.
Kinder Morgan hasn’t only maintained a great dividend during the epidemic; it has continued to boost its dividend payments, providing it one of the best yields in the energy market.
Kinder Morgan is one of the most outstanding energy stock selections out there, with a long history of leadership in the energy industry, unequalled energy infrastructure, excellent financial stability, and a push toward sustainable energy.
The current share price of KMI is $15.57, with a market cap of $38.09 billion.
6. ConocoPhillips (COP)
ConocoPhillips is a classic energy firm focused on oil exploration. In reality, it is Alaska’s greatest crude oil production. ConocoPhillips stands behind its actions and its mission of providing clients with reliable energy services.
Interestingly, while working with a number of clean energy tech businesses to find methods to make renewable resources more feasible, the corporation appears to be doubling down on crude as the globe pushes for clean energy, leveraging low-cost acquisitions in the traditional oil sector.
ConocoPhillips has been on a very steady upward path, producing returns that are in line with what growth investors would expect to see, while others in the energy industry have faced some pain in the first half of 2021. Although the firm is going against the trend in terms of renewable energy, it appears that its gamble is paying off, making the stock one to keep an eye on.
The current share price of COP is $71.08, with a market cap of $93.75 billion.
7. FuelCell Energy, Inc. (FCEL)
FuelCell Energy is a relatively unknown firm. It’s the most dangerous investment option on this list because it’s the smallest firm featured. But, despite the dangers, it’s also the stock with the most long-term potential for significant returns as an energy cornerstone.
FuelCell Energy is a company that develops patented fuel-cell technology to produce sustainable energy at a low cost. Unfortunately, despite the fact that the company is now trading in the large-cap zone, FuelCell Energy is currently losing money and is expected to do so for at least the following year.
Fuel-cell technology is still in its infancy. So investing in the firm is a gamble that not only will carbon-capture technology become a large part of the green energy market but that FuelCell Energy will be one of the industry leaders.
Not only is the firm innovating in terms of energy-producing technology, but it is also aiming to build a supply chain that will cement its position as a leader in the fuel cell sector.
The current share price of FCEL is $6.40, with a market cap of $2.35 billion.
8. NextEra Energy Inc (NEE)
Last but not least, NextEra Energy company. Although this is not a household brand, it serves more homes than any other publicly listed utility business globally, making it a significant participant in the energy market. Moreover, while NextEra Energy is one of the top ten largest energy businesses in the world, it is the only one that isn’t also active in the traditional oil and gas industry.
When we discuss the green energy trend, NextEra Energy has remained well ahead of its competition. It is presently the world’s largest generator of wind and solar energy due to its early embrace and enormous expenditures in renewable energy infrastructure.
Although the stock has mostly recovered, it hasn’t expanded in lockstep with higher oil prices, which have sparked an extensive recovery in the industry. As a result, the stock might be a good buy for a bargain investor. In addition, investors may expect NextEra Energy stock to continue generating great sales, earnings, and gains.
The current share price of NEE is $90.80, with a market cap of $178.13 billion.
How to buy energy stocks?
The energy sector practically drives the global economy. Therefore, it is not surprising anymore that energy stocks hold the utmost importance in one’s investment portfolio. You can look at the rising oil and natural gas prices, which indicates that you cannot ignore the energy stocks. You can easily understand this market sector by watching these major categories of energy stocks.
- Renewable Energy Stocks: The companies of this sector conduct operations on wind, solar power, and geothermal energy production.
- Mining Stocks: This category includes nuclear power plants that focus on mining uranium. Companies mining coal play a major role as coal is the main source of producing energy.
- Oil and Natural Gas Stocks: These companies heavily operate to find new sites for oil and natural gas.
- Refining and Pipeline Stocks: This category includes the companies based on refineries that finally take raw materials like crude oil to process them for consumption.
You can also read Biotech Stocks to Buy
Risks of buying energy stocks
Environmental concerns: While environmental concern can be a significant opportunity for energy companies to innovate and grow in the future, it can also be a red flag for such companies as for now, products like oil and coal are very harmful to the environment because they emit greenhouse gases in a large volume and it can directly affect your returns.
Massive investment is required: To innovate and create new technologies for environment-friendly processes of coal, oil, and natural gas, companies have to invest a major chunk of funds into research and development. Such financial drains can hurt your returns.
Volatility: Volatile markets are considered to be suitable for short-term traders like scalpers and swing traders, but it can create havoc for long-term investors. The rapid changes in oil and gas prices create major risks for investors’ capital in the energy sector.
Prohibition or regulation: As we are on the brink of losing out on the quality of good air, water, and other natural resources, governments of many nations can prohibit or regulate the use of some sources of energy like fossil fuels.
Investing in energy is dangerous, especially as the industry undergoes a clean energy transformation. However, making the appropriate movements in the space might result in significant rewards.
You can invest in green energy stocks with one of the best well-regulated stockbrokers, ABinvesting. The firm provides over 60 trading tools and free learning resources for the technical analysis of all instruments.
It’s critical to consider the transition from traditional electricity to renewable, environmentally friendly energy while investing in the energy business. Companies with an excellent track record of success continually migrating to low-cost energy options have the most promise.