Energy-related stocks are on the upswing, thanks to oil prices being on the rise.
With Omicron’s surge on the way down and the threat of war between Russia and Ukraine, a major player in energy transit, the price of Brent crude is forecast to top $100 a barrel this year.
That’s fueling a buy recommendation for Schlumberger Ltd. (SLB, Financial), one of the world’s leading providers of technology and services for the energy sector.
Schlumberger reported total revenue of $6.225 million for the fourth quarter of 2021, a 12.5% increase over the past year. Analysts say the company will benefit from tighter oil supplies just as demand is expected to increase.
The Houston-based company is a way for value investors to invest in the oil sector without investing in an oil company. Schlumberger includes segments of digital and integration, reservoir performance, well construction and production systems.
The oilfield service giant's total revenue for the quarter also topped analysts' expectations.
With a track record of performance dating back to 1926, Schlumberger is expected to continue to grow past a pandemic-induced slump. Its research and development investments make it a brighter pick than other companies in the sector.
Schlumberger’s price-earnings ratio of 30.15 is a little high, but it has a dividend yield of 1.26%. Trading at $38.86 Jan. 27, the stock is below its high of $41 and is projected to go higher in 2022, a year that’s expected to see the world emerge from the shadow of the Covid-19 virus and its variants.
Schlumberger is only one energy company that’s worth a look. Here are a few other options in the sector for value investors.
Chevron
Ranked by analysts as a buy, Chevron Corp. (CVX, Financial) is an oil company with a low price-earnings ratio and an earnings yield of 7.89%. The company is also focused on alternative fuels beyond fossil fuels. Energy is expected to rev up this year, and Chevron has the solid financials to make any value investor happy.
ConocoPhillips
ConocoPhillips (COP, Financial) is an oil company that’s focused on liquified natural gas, oil sands and shale oil production, among other areas. The company had revenue growth of more than 46% over the past year, and it is expected to grow more this year.
The Energy Select Sector SPDR Fund
If you want to branch out into the energy sector but want diversification, the Energy Select Sector SPDR Fund (XLE, Financial) is an easy choice. It is a low-fee exchange-traded fund that tracks a market cap-weighted index of U.S. energy stocks in the S&P 500. Its top holdings include Chevron, ConocoPhillips, Schlumberger and others, including Marathon Petroleum (MPC, Financial), Exxon Mobil (XOM, Financial) and Phillips 66 (PSX, Financial). In the past year, the ETF has seen a share price ride of more than 64%. Its dividend yield is 3.72%.
