Yahoo Finance 3 Energy Companies to Gain on Rock Solid Balance Sheet
The price of West Texas Intermediate (WTI) crude oil is trading at more than the $80 per barrel mark and is likely to remain strong this year. The U.S. Energy Information Administration (“EIA”) projects WTI oil to average $82.03 per barrel in 2024, a notable increase from last year's $77.58. EIA noted that ongoing reductions in global oil stockpiles are expected to continue pushing commodity prices upward.
While crude prices stay favorable, the likelihood of the commodity reaching $100 per barrel, as seen in 2022, is extremely slim. Additionally, EIA expects the annual GDP growth rate to decline to 2.4% in 2024 from last year's 2.5%. For 2025, the growth rate is projected to fall further to 1.8%. Thus, the forecasted slowdown of the GDP growth rate may consequently dampen energy demand, thereby negatively impacting commodity prices.
3 Stocks to Gain
The current scenario highlights the need to keep a close watch on major energy companies like Exxon Mobil Corporation XOM, Chevron Corporation CVX, and ConocoPhillips COP, which are known for their strong balance sheet. This is because these energy giants can rely on their financial stability to navigate a volatile and uncertain business environment. While Chevron has a Zacks Rank #2 (Buy), ExxonMobil and ConocoPhillips carry a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Chevron and ExxonMobil boast robust balance sheet, enabling them to withstand challenging business environments. XOM’s total debt-to-capitalization ratio stands at almost 16%, while Chevron's is at 11.9%, both significantly lower than the 24.2% average for composite stocks in the Zacks Oil & Gas Integrated International industry. Over the past three years, these industry leaders have consistently maintained lower debt-to-capitalization ratios, supported by strong oil prices that enhance their financial positions. This financial strength positions them well for future gains.
ConocoPhillips has secured a promising production outlook by capitalizing on its extensive drilling inventory and diverse upstream assets. Compared to composite stocks belonging to the industry, the leading upstream energy company has significantly less reliance on debt capital. This robust balance sheet positions ConocoPhillips to better withstand adverse business conditions. Like Chevron and ExxonMobil, favorable oil prices are also boosting COP’s financial performance.
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Chevron Corporation (CVX) : Free Stock Analysis Report
Exxon Mobil Corporation (XOM) : Free Stock Analysis Report
ConocoPhillips (COP) : Free Stock Analysis Report
