Energy stocks are a bright spot in this down market.
The Energy Select Sector SPDR Fund (NYSE: XLE) is up roughly 30% over the last 12 months.
Energy stocks benefit from a perfect storm:
- Soaring prices for oil and natural gas.
- Demand that far outpaces supply.
That leads me to the 97-rated Power Stock I have for you in this episode of The Stock Power Podcast.
This company specializes in crude oil and gas exploration and production in West Africa.
And its stock is a perfect example of the “maximum momentum” we love to see in stocks, after its share price has rocketed more than 100% higher in the last 12 months.
Not All Oil and Gas Companies Are the Same
Oil and gas companies work on one of three different levels within the industry:
- Upstream companies explore for and produce oil and natural gas.
- Midstream companies transport and store oil and gas before the natural resources are refined and processed.
- Downstream oil and gas operations turn oil and gas into finished products (think gasoline, heating oils and jet fuel).
In today’s podcast, I share an upstream company that works offshore in West Africa.
- Its stock scores a 97 on our Stock Power Ratings system!
- The stock just hit its 52-week high and shows no signs of slowing down.
- The company has a one-year annual sales growth rate of 196.4% and an earnings-per-share growth rate of 263.7%!
I believe this stock has not found its top yet.
The Trend: Upstream Free Cash Flow Tells a Big Story for Energy Stocks
In finance terms, free cash flow is the amount of money generated minus money spent on operations.
To put it simply, it’s the money left over after a company meets its needs.
Free cash flow is a good way to determine whether a company is a good investment or a bad one. A company with higher free cash flow generates more money than it needs.
And there’s a lot of money flowing into the global upstream industry.
In May 2022, research firm Rystad Energy reported free cash flow of upstream oil and gas companies reached a record $493 billion.
Rystad projects that free cash flow will jump to $834 billion this year — a 69.2% increase from 2021!
In this episode of The Stock Power Podcast, I share a company exploring for oil and natural gas in West Africa. I’ll tell you why it’s a strong contender for your portfolio.
Its “Strong Bullish” 97 overall rating means we expect it to beat the broader market by three times over the next 12 to 24 months.
The Stock Power Podcast
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Safe trading,
Matt Clark, CMSA®
Research Analyst, Money & Markets
Matt Clark is the research analyst for Money & Markets. He’s the host of our podcast, The Stock Power Podcast, as well as the Marijuana Market Update. He’s also a certified Capital Markets and Securities Analyst through the Corporate Finance Institute. Before joining the team, he spent 25 years as an investigative journalist and editor — covering everything from politics to business.