Energy stock

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Written on Jan 9, 2024
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Quick definition

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Energy stocks are stocks of companies that do business in the energy sector.

Key details

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  • Energy stocks include oil drilling companies, oil refinery companies, natural gas exploration companies, and many more related businesses. 
  • In recent years, renewable energy stocks have surged in value. 
  • Energy companies are some of the largest and best-funded in the world.

What are energy stocks?

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Energy stocks are stocks of companies that do business in the energy sector. They include oil drilling companies, oil refinery companies, natural gas exploration companies, and many more related businesses. 

What are the defining characteristics of energy stocks?

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1) These companies do business in the energy sector

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We mentioned some of the types of businesses in this sector above, but pretty much any company involved in generating energy or acquiring fuels is included in energy stocks. The list also includes industries such as coal and nuclear power.

2) Different stocks are headed in very different directions

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Though the global COVID-19 pandemic has in many ways pushed climate change to the sidelines in the public consciousness, the planet still faces major climate-related challenges. To address these challenges, both businesses and consumers have begun shifting toward cleaner energy sources such as solar and wind, and away from dirtier energy sources such as coal. Know what you’re buying before you dive into an energy stock, keeping those types of distinctions in mind. 

3) Energy will always be a vital commodity

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Whatever form energy takes, it will remain a vital pillar of the global commodity. Energy of various kinds powered society through the Industrial Revolution, all the way to today, and will continue to do so for centuries to come.

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The 2020 oil price war involving Saudi Arabia and Russia crushed global oil prices, which in turn hammered many oil stocks. Pay attention to global trends in energy consumption, supply, demand, and pricing, as those factors quickly spread from the relevant energy commodity of the moment to related stocks.

What are some examples of energy stocks?

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If you want to invest in energy stocks, here are some companies you might want to consider putting your money into.

1) Chevron (CVX)

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One of the largest energy companies in the world, Chevron’s stock took a big hit in early 2020 due to the combined impact of the COVID-19 pandemic and the global oil prices war. It’s rallied since then, nearly doubling in price from its March lows to its level in early June.

2) ConocoPhillips (COP)

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The multinational energy company has been a value investor’s dream lately. As of June 2020, the stock had doubled in price from its March lows, a strong complement to its 3.6% dividend yield and its modest 15-to-1 price-to-earnings ratio.

3) First Solar (FSLR)

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In March 2020, solar panel maker First Solar’s stock plummeted to its lowest level in three years. It’s rebounded since then, gaining more than 50% from its March low to its levels in early June. 

4) Renewable Energy Group (REGI)

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Renewable Energy Group is an American biodiesel company that’s also part of the Fortune 1000. Its stock surged to an all-time high in June 2020, and offers more growth potential given that its price-to-earnings ratio is less than 4-to-1.

How do I find energy stocks?

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Investment websites such as Yahoo Finance and MarketWatch provide screening tools which let you search for energy stocks based on parameters such as earnings per share and revenue growth. But you can also check out some of the best energy stocks right here, with our monthly lists of energy stocks on the rise. 


Sources & references

Prash Raval

Prash Raval

Financial Writer

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Prash is a financial writer for Invezz covering FX, the stock market and investing. For over a decade he has traded spot FX full time while running an educational service helping novice traders learn the markets. He has a keen interest in micro and small cap stocks....