3 energy stocks to buy now: May 2024

Investing in high-end stocks to buy in today’s market is indicative of a complex landscape. Oil prices were extremely volatile last year, peaking above $90 a barrel and falling to $60, negatively impacting the performance of major oil companies. However, despite price fluctuations, major oil companies continue to flex their muscles and offer excellent growth at current prices.

Meanwhile, the renewable energy sector is putting on its own promising show. Achieving net zero emissions is a difficult task, and energy systems around the world have a lot of catching up to do. Therefore, investors must prefer a balanced portfolio by targeting their investments in the renewable and traditional energy sectors.

Energy Stocks to Buy: ConocoPhillips (COP)

ConocoPhillips (NYSE:POLICEMAN) stands out as one of America’s leading exploration and production (E&P) companies thanks to its robust production capabilities. With its strategic bases in the Permian Basin and the Eagle Ford shale, COP has an impressive portfolio, benefiting from relatively low production costs. Therefore, it is one of the most profitable companies in its niche, with 5-year gross and net income and free cash flow (FCF) margins of 46%, 14.3% and 13.2%, respectively. Moreover, it boasts an excellent dividend profile, returning around 50% of its profits to shareholders. Additionally, it gives an excellent 2.6%, with a 5-year growth of 22%.

Recent results have been weighed down by volatility in the natural gas business, offset by higher oil production volumes. However, volatile energy prices are unlikely to impact the company’s cash distribution to shareholders. COP expects to return as much as $9 billion in capital to shareholders this year through dividends and share repurchases.

Enterprise Product Partners LP (EPD)

Midstream giant Enterprise Product Partners (NYSE:EPD) is a high-quality yield trading at a very attractive price. It boasts an efficient business model with an extensive network of pipelines and warehouses around the world. Moreover, it operates on long-term take-or-pay contracts, ensuring solid returns as customers pay for pipeline and storage capacity, regardless of their use. As a result, it has amassed a huge trove of cash, with trailing twelve months (TTM) cash flow of more than $2.7 billion.

Recent results have been impressive, with EPD seeing a rebound and positive earnings growth over the past few quarters. Despite difficult market conditions, the company delivered two consecutive quarters of good and lowest results. Moreover, as it progresses, the company will complete $6.9 billion in development projects by 2026. Moreover, it is trading at just 1.11 times forward sales estimates, representing a 26% loss to the sector median . Add to that a dividend yield of over 7% and 25 years of payout growth, and you have a stock you won’t want to pass up.

NextEra Energy (NEE)

The energy of the next era (NYSE:FROM HOME) is one of the largest forces in the U.S. utilities and renewable energy market. Over the past several years, NextEra has leveraged its robust utility business to advance its ambitious green energy projects. This strategy brings results – the average revenue growth over 5 years was 12% while generating 20% ​​EBITDA in the same period. Moreover, it has been an extremely profitable investment over the years, with a return of 74% over 5 years.

Despite operating in a volatile environment, NextEra is performing relatively well. Despite first-quarter sales declines, adjusted EPS rose a solid 8%. This outstanding development is underpinned by the rapid expansion of renewable energy capacity with the addition of 1,640 megawatts of solar power currently in operation. This complements an already extensive portfolio of 6,400 MW photovoltaic products. Additionally, the company added 2,765 megawatts to its renewable energy project portfolio.

As the company grows, management expects stable single-digit revenue growth of 6% to 8% over the next few years. Thus, NEE has decent growth potential, and the dividend has been growing for over 28 years.

As of the date of publication, Muslim Farooque did not hold (directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the author and are subject to InvestorPlace.com’s Editorial Guidelines.