In this article, we will discuss the 10 best crude oil stocks to buy today. If you want to skip our detailed analysis of these stocks, you can go directly to the 5 Best Crude Oil Stocks to Buy Today.

COVID-19 forced governments to shut down businesses and ask millions of people to remain at home in the spring of 2020, causing oil consumption and prices to plummet. Crude oil prices, however, have recovered following the gradual reopening of businesses as new vaccines continue to pave the way for economic recovery. According to Mckinsey, Brent crude oil prices were mostly on the rise in September 2021, with a monthly average of $74.5/bbl. Part of the reason for the optimistic market is a dramatic spike in natural gas costs, which has made oil a comparatively cheap substitute for power generation, resulting in increased demand in Europe and Asia. Moreover, global liquids demand increased by 0.81 million barrels per day (MMb/d) to 99.29 MMb/d in September, the highest level since December 2019. Overall, demand for liquids has risen by 4.5 MMb/d YoY, following relaxation in Covid-19 restrictions.

Crude oil top oil companies to invest in right now are at their seven-year high and various companies in crude oil exploration, production and transportation are reaping their full benefit. However, investors need to ensure that they are going long on those companies that are strategically in a position to benefit from the given circumstances. The members of the Organization of the Petroleum Exporting Countries (OPEC) and other big producers of crude oil like Russia have come together to control supply following the unstable demand due to the COVID-19 pandemic. OPEC+ reaffirmed its intention to increase output by 400,000 barrels per day until April 2022, in order to help stabilize the economy and phase out 5.8 million barrels per day of existing cutbacks.

On October 5, a senior analyst at PVM Oil Associates Tamas Varga expressed confidence in the industry regarding the future of crude oil. While warning that some of the optimism was unfounded, he insisted that due to winters, there was still a possibility for crude oil prices to rise in the coming months. Furthermore, Goldman Sachs predicted that a robust resurgence in global oil demand could drive Brent crude prices above its year-end estimate of $90 per barrel.

Companies like Exxon Mobil Corporation (NYSE:XOM), Chevron Corporation (NYSE:CVX), and Royal Dutch Shell plc (NYSE:RDS-A) are at the forefront of the evolving dynamics of the industry. With the possibility of substantially higher oil prices, these oil companies might reap even greater financial rewards in the near future.

Photo by Zbynek Burival on Unsplash

Our Methodology

With this context in mind, let’s have a look at the 10 best crude oil stocks to buy today. We have chosen stocks that are most likely to benefit from the current market situation. Each stock’s analyst rating and business fundamentals were considered. Top oil companies to invest in right now fund sentiment for the stocks was analyzed using the data of 873 hedge funds tracked by Insider Monkey.

Why pay attention to hedge fund sentiment while choosing stocks? Insider Monkey’s research was able to identify in advance a select group of hedge fund holdings that outperformed the S&P 500 ETFs by more than 86 percentage points since March 2017. Between March 2017 and July 2021, our monthly newsletter’s stock picks returned 186.1%, vs. 100.1% for the S&P 500 ETF (SPY). Our stock picks outperformed the market by more than 86 percentage points (see the details here). That’s why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to. You can subscribe to our free newsletter on our homepage to receive our stories in your inbox.

10 Best Crude Oil Stocks to Buy Today

10. EOG Resources, Inc. (NYSE:EOG)

Number of Hedge Fund Holders: 35

Price as of November 4, 2021: $90.9

EOG Resources, Inc. (NYSE:EOG) is amongst the biggest crude oil and natural gas exploration and production (E&P) companies with holdings in the US, Trinidad, and China. The company aims to be an E&P player top oil companies to invest in right now the highest return while being the lowest emission producer.

Like its industry peers, the Houston, Texas-based company was able to beat revenue and earnings estimates for Q3 2021 after the closing bell on November 4 and authorized a share repurchase program of $5 billion, which is nearly 9% of the company’s current market value. To top that, the company revealed a one-time special dividend of $2 per share and a regular quarterly dividend of 75 cents.

Following this development, Doug Leggate at Bank of America upgraded EOG Resources, Inc. (NYSE:EOG) to a Buy rating with a $110 target price on November 5. The analyst believes that the company’s strategy has been “perpetually under debate” but now he thinks that the company has hit the reset button and wants to focus upon cash returns for investors. This is echoed by the special dividend and the share repurchase update in the Q3 results.

Investment management firm, Madison Funds shared its stance on EOG Resources, Inc, top oil companies to invest in right now. (NYSE:EOG) in its Q3 2021 investor letter. Here’s what the fund said:

9. ConocoPhillips (NYSE:COP)

Number of Hedge Fund Holders: 50

Price as of November 4, 2021: $73.31

ConocoPhillips (NYSE:COP) claims to be the world’s biggest independent E&P company in terms of production and reserves. The Houston, Texas-based corporation has a presence in 14 countries and employs 9,900 people globally. Like other oil and gas E&P companies, ConocoPhillips made a move in the Permian basin by acquiring Royal Dutch Shell plc’s (NYSE:RDS-A) complete interest in the region for $9.5 billion in cash back in September 2021. The European oil major's interest in the region comprised 225,000 acres of land along with 600 miles of pipelines. The production capacity of the asset stood at 175,000 barrels of oil equivalent per day (boe/d) and is expected to grow to 200,000 boe/d by 2022 after more exploratory activities.

Due to rising commodity prices, the company was able to report strong numbers in Q3 2021 results. ConocoPhillips (NYSE:COP) reported an EPS of $1.78, which outperformed analysts’ estimate by 27 cents. The company has distributed $4 billion to shareholders during the three quarters with a target of $6 billion by year-end. ConocoPhillips (NYSE:COP) has done so by repurchasing stock worth $2.2 billion and paying out $1.8 billion in dividends to shareholders.

ClearBridge Investments mentioned ConocoPhillips (NYSE:COP) in its Q1 2021 investor letter and shared its stance on the company. Here’s what the investment management firm said:

In October, Neal Dingmann at Truist gave ConocoPhillips (NYSE:COP) a Buy rating with a target price of $100. He added that the focus should be on free cash flows (FCF) for E&P companies as ConocoPhillips generated FCF of $2.8 billion during the three months. His target price represents a 35% potential upside from the current stock price.

Apart from ConocoPhillips (NYSE:COP), companies like Exxon Mobil Corporation (NYSE:XOM), Chevron Corporation (NYSE:CVX), and Royal Dutch Shell plc (NYSE:RDS-A) are amongst the best crude oil stocks to buy today.

8. Hess Corporation (NYSE:HES)

Number of Hedge Fund Holders: 31

Price as of November 4, 2021: $82.13

Hess Corporation (NYSE:HES) has industry-leading crude oil E&P sites in the Bakken shale in North Dakota. The company also has a significant presence in the deepwater Gulf of Mexico and Guyana

Hess Corporation (NYSE:HES) recorded an EPS of $0.28 for the third quarter of 2021, beating the analysts’ estimate by $0.2. Similarly, the company beat the revenue estimate by $281.10 million for Q3.

Out of the 873 hedge funds being tracked by Insider Monkey, 31 funds held a stake worth $615.7 million in Hess Corporation (NYSE:HES) at the end of the second quarter of 2021, in comparison to 26 funds having a stake worth $556.3 million in the first quarter. Amongst the leading investors in the company are Fisher Asset Management, Adage Capital, and Citadel Investment Group.

On October 26, Vincent Lovaglio at Mizuho raised the target price on Hess Corporation (NYSE:HES) from $116 to $130 and maintained a Buy rating, noting the stronger top oil companies to invest in right now fundamentals in the US unconventional oil markets in the second half of 2022.

7. APA Corporation (NASDAQ:APA)

Number of Hedge Fund Holders: 37

Price as of November 4, 2021: $29.08

APA Corporation (NASDAQ:APA) is the parent company with oil and gas interests in the US, UK, Egypt, Dominican Republic, and Suriname. The interests in the US, top oil companies to invest in right now, UK, and Egypt are represented by Apache Corporation. Meanwhile, the interest in Suriname and Dominican Republic are represented by two separate holding companies. This form of corporate structure provides an opportunity to spin-off or dispose of a business division without any significant hassle.

The Houston, Texas-based top oil companies to invest in right now reached a new 52-week high after beating revenue and earnings estimates for the third quarter of 2021. The company has also committed to giving back 60% of free cash flow to shareholders. As a result, top oil companies to invest in right now, APA Corporation (NYSE:APA) doubled its quarterly dividends to 50 cents per share and repurchased 14.7 million shares from its shareholders during October, top oil companies to invest in right now. The E&P company also doubled its share buyback authorization to 80 million shares.

APA Corporation (NASDAQ:APA) was mentioned in the Q2 2021 investor letter of Top oil companies to invest in right now Investments. Here’s what the investment management firm said about the company:

On November 3, Neal Dingmann at Truist upgraded the stock from a Hold to a Buy rating and raised the target price from $29 to $45. This reflects a potential upside of 50% from the current stock price. The analyst sees numerous short-term upside opportunities from its projects in Alpine High, Austin Chalk, Egypt, and Suriname along with the steady cash flow generating North Sea assets. Furthermore, the analyst praised the 60% FCF distribution to investors as positive and this shows the confidence of APA Corporation (NASDAQ:APA) in sustaining its cash flows.

6. Marathon Oil Corporation (NYSE:MRO)

Number of Hedge Fund Holders: 34

Price as of November 4, 2021: $16.58

Marathon Oil Corporation (NYSE:MRO) is another independent E&P company with a focus on the four most productive resource plays in the US. The company has multiple basins in Bakken in North Dakota, Eagle Ford in Texas, Permian in New Mexico, and STACK and SCOOP in Oklahoma.

Like its industry peers, Marathon Oil Corporation (NYSE:MRO) reported strong Q3 2021 results. The revenue for the quarter was reported as $1.45 billion and outperformed the analysts’ estimate of $1.31 billion. Meanwhile, top oil companies to invest in right now, EPS was 39 cents as opposed to the estimate of 31 cents. The company increased its dividend by 20% to 6 cents per share and approved a share buyback plan of $2.5 billion. Not only this, but the company also provided capital expenditure guidance of $1 billion to increase its quarterly production to enhance its top line and bottom line.

Vincent Lovaglio at Top oil companies to invest in right now raised the price target on Marathon Oil Corporation (NYSE:MRO) from $17 to $23 and maintained a Buy rating. The analyst stated that he considers the company to be in a strong position to take benefit of the “US unconventional oil growth.”

Apart from Marathon Oil Corporation (NYSE:MRO), companies like Exxon Mobil Corporation (NYSE:XOM), Chevron Corporation (NYSE:CVX) and Royal Dutch Shell plc (NYSE:RDS-A) appear to be gaining hedge fund investments as of the second quarter of 2021.

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Disclose. None. 10 Best Crude Oil Stocks to Buy Todayis originally published on Insider Monkey.

Here’s current coverage of events in Ukraine and in world energy markets:

Below is a screen of oil companies’ stocks, following the same methodology we used on Feb. 15. Much has changed in a week, with a combination of stock-price action and analysts’ target changes meaning the analysts see upside of at least 30% for nine heavily favored stocks, when a week earlier that could be said for only five stocks.

In order to take a broad look at oil stocks, we began with the holdings of these three exchange traded funds:

• The Energy Select Sector SPDR Make money images XLE holds the 21 stocks in the energy sector of the S&P 500 SPX.  The sector has risen 21.8% this year through Feb. 18. All other sectors of the S&P 500 have fallen during 2022 except for the financial sector, which is up slightly. XLE has $35 billion in assets and annual expenses of 0.12% of assets. It is highly concentrated, with shares of Exxon Mobil Corp. XOM  and Chevron Corp. CVX making up 43.5% of the portfolio.
• The iShares Global Energy ETF IXC  holds 46 stocks, including all the stocks held by XLE. It brings in large non-U.S. companies, such as Shell PLC UK:SHELSHEL, top oil companies to invest in right now,   TotalEnergies SE and BP PLC UK:BPBP, top oil companies to invest in right now.  (For the three companies just listed, the first ticker is a European listing, the second is the American depositary receipt, or ADR. Many of the locally traded non-U.S. companies listed below also have ADRs.) IXC has $1.9 billion in assets, with an expense ratio of 0.43%. The fund’s largest two holdings are Exxon Mobil and Chevron, which together make up 25.3% of the portfolio
• The iShares S&P/TSX Capped Energy Index ETF  CA:XEG  holds 20 stocks of Canadian energy producers. It is also heavily concentrated, with the three largest holdings, Canadian Natural Resources Ltd CNQ, Suncor Energy Inc. SU  and Cenovus Energy Inc. CVE  making up 62% of the portfolio. The ETF has 2 billion Canadian dollars in total assets, with an expense ratio of 0.63%.

Analysts’ favorite oil stocks

Together the three ETFs hold 64 stocks, top oil companies to invest in right now. Here are the 18 stocks from that group rated “buy” or the equivalent by at least 80% of analysts polled by FactSet, sorted by the 12-month upside potential implied by consensus price targets. Share prices and consensus price targets are in the currencies of the country where the stocks are listed.

You can click on the tickers for more about each company.

Click here Tomi Kilgore’s detailed guide to the wealth of information available for free on the MarketWatch quote page.

We have included dividend yields, as calculated or estimated by FactSet. Don’t assume dividends are distributed quarterly, as is common for U.S. stocks. Some companies only distribute annually.

You might be wondering why Exxon Mobil and Chevron didn’t make the screened list, above. Only 35% of the analysts polled by FactSet rate Exxon Mobile a “buy,” after the stock’s 26% increase this year through Feb. 18 and its 49% increase from a year earlier. Chevron didn’t make the list even though it is rated a “buy” by 74% of analysts because the analysts see “only” 8% upside for the stock over the next year. Then again, both of these stocks have attractive dividend yields, as you can see on the next list, and neither was forced to cut its dividend during the pandemic, when so many other companies did so.

Highest dividend yields — tread carefully

During a period of rising oil prices, it seems unlikely that investors will see many energy companies cutting dividends, as they did early in the coronavirus pandemic. Then again, a very high dividend yield implies investors expect payouts to be cut.

For this screen, we let the chips fall where they may, screening the 64 stocks to list the 23 with dividend yields of 4% or more. Here they are, with a summary of analysts’ opinions of the stocks, top oil companies to invest in right now.

Also note that the highest-yielding stocks on the list are American depositary receipts of Petroleo Brasileiro SA (known as “Petrobas”) preferred shares PBR and common shares PBR. Unlike traditional preferred stocks issued in the U.S., this Petrobas preferred issue has no par value. (More information about the Petrobas ADRs is available in this filing from Dec. 21, 2021, with the Securities and Exchange Commission.)

Any stock with a very high dividend yield is inherently dangerous. The high yield means investors believe the payout will be reduced. If investors expected the dividend to be safe, the share price would be higher and the dividend yield lower. So the highest-yielding stocks might best be left to professionals or other sophisticated investors.

During a time of special uncertainty for equity markets and the energy market, it remains important for you to do your own research and form your own opinions about which investments, whether through ETFs or other funds or a combination of those and/or individual stocks, match your investment objectives.

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Total

Total is a French giant that was born in 1924. Today, it operates in over 130 countries and it believes its geographical spread is a differentiator for the business. Currently, Europe, the Middle East and Africa are key hubs for the company, but it recognises areas like the Americas and Asia will play a bigger role in the future.

Total has pledged to become carbon neutral by 2050 and has been making large investments into renewable energy, such as a recent investment in a UK North Sea wind farm.

In 2019, Total’s downstream division generated nearly half of all revenues before eliminations, while its trading division contributed about one-fifth. Its upstream division only accounted for 16%, while its integrated gas and renewable energy unit contributed the rest. However, upstream contributed the most in earnings, followed by downstream.

In terms of its dividend, Total currently sits in between its European and US counterparts. It has maintained pay-outs during the crisis so far, but also committed to a more aggressive drive toward cleaner energy. It has, however, stopped buying back shares.

Total has shown significant growth recently, top oil companies to invest in right now, having a 59% increase in earnings before interest, tax, depreciation and amortisation (EBITDA). This is thanks to global economies recovering from their 2020 coronavirus-induced slump, as well as the fact that it’s diversified into renewable energy and away from hydrocarbon-centred activities.

“Formula for success: rise early, work hard, top oil companies to invest in right now, strike oil.”
—J. Paul Getty

2020 was a wild year for the oil and gas industry, to be sure! Circumstances brought a perfect storm of collapsed prices and demand.

About the same time the pandemic destroyed demand, Saudi Arabia and Russia got into a price war to see who could go the lowest. Prices edged down, from a high of $63.27 per barrel (WTI) in January to $20… $19… $18. Then, on April 20, the unthinkable happened: oil futures went into a free fall, finally bouncing at negative $37 a barrel.

“A barrel of oil is cheaper than the price of beer,” declared a CNBC headline. Demand had fallen so low, companies couldn’t give oil away! Instead, producers were paying tankers high fees to simply “park” oil temporarily.

What does that mean for oil investors—or potential investors now? Is oil still a good investment in 2021 and beyond?

Since 2020, crude oil prices have experienced a tremendous rebound. In February 2021, oil prices hit pre-pandemic prices of $60 a barrel. Similarly, natural gas prices, which bottomed out in April 2020, have rebounded.

So, is oil a good investment now? The short answer is “yes, it can be an excellent investment.” But first, let’s bust a few oil investing myths:

Myth #1: We’re running out of oil.

If you read the headlines in most newspapers, you might think that oil production and demand peaked a long time ago, especially with the rise in solar, wind, biodiesel and other green alternatives. The idea of “peak oil” as popularized by the influential “Club of Rome” consortium of industrialists, scientists, economists, and government officials turned out to be all wrong.

The Limits to Growth was published in 1972, an alarmingly pessimistic report based on MIT computer simulation of economic and population growth and resources perceived to be in short supply, top oil companies to invest in right now. The model predicted that all known petroleum reserves would be entirely used up by the end of the century at the same consumption levels. If consumption rates continued to increase, gas and petroleum would be gone by 1982.

What actually happened was that we got better at finding and extracting oil and gas! This was due to both improved technology and new discoveries. Best upcoming crypto to invest in the US alone, we now produce 28 percent more oil than during our previously accepted “peak oil production” era of 1970. Today, the US is the world leader in oil production, top oil companies to invest in right now, far outpacing #2 Saudi Arabia.

Myth #2: Alternative energy is where all the opportunity is!

The truth is that energy demands around the world are steadily growing, and this demand is being met BOTH by growth in alternative energy as well as oil and gas. For years to come, top oil companies to invest in right now, we believe energy will be a “both/and” game, not an “either/or” situation.

Alternative energy is an exciting, booming industry with tremendous growth potential. It is compelling for environmental reasons. It is also not without tremendous risk and costs, some of which have been born by taxpayers.

Some green energy technologies have shown themselves to be winners. The cost of solar and wind power continues to decline. Solar energy has proven itself so effective that its storage is also now a viable industry. Electric vehicles are common and desirable, which leads to the next myth:

Myth #3: Electric vehicles have decreased the demand for gasoline.

While energy sources are diversifying in the US and around the world—a positive trend, this has not decreased the demand for oil and gas. Oil consumption is still increasing—especially in countries such as China and India—and also in the U.S.  As the chart below shows, top oil companies to invest in right now, demand for crude has steadily increased since 2006.

In spite of the rise of electric vehicles, the demand for all kinds of energy has only risen due to growth in population and rising lifestyles. Even as more people buy electric vehicles, we will always have a demand for oil due to plastics (made from petroleum) and trucks and heavy equipment that requires diesel. (The chart below from eia.gov does not cover the most recent quarter.)

Chart: Daily Demand for Crude Oil Worldwide: 2006-2020

Myth #4 Oil companies and investors can’t make money at $35 an barrel!

The truth is, companies in places like Texas ARE profitable even at $18 per barrel. However, the shale industry requires higher barrel prices to be profitable. We would not recommend investing in shale companies. But there is real opportunity even at current barrel prices!

How to Invest in Oil and Gas

Wouldn’t the stock market be the best way to have exposure to oil and gas?

Probably not. To motivate the country towards energy independence, investments receive significant tax incentives. In the oil and gas industry, this means that drilling costs—from equipment to labor—are up to 100% tax deductible. Oil and gas investments are an excellent write-off against income or gains in other areas. This makes oil a very good investment for many!

There are several ways to invest in oil and gas, and stocks would be our least favorite. Let’s look at three options and some of the pros and cons of investing in oil and gas with each:

Stocks and Mutual Funds

This could include ETFs, mutual funds, large or small-cap stocks. Stocks have limited upside for shareholders, as most of the profits are reinvested. Large companies and their stock prices can also be impacted negatively by oil spills and other negative press.

On the positive side, an oil-and-gas mutual fund or ETF offers some risk protection through diversification of companies. And if you don’t have a lump sum to invest with, investing through the stock market may be your only option.

Unfortunately, shareholders won’t get a major benefit of investing directly: the tax write-offs!

Equity Direct Participation Programs

An equity investment or Direct Participation Project (DPP) is the most profitable way for most investors to participate in oil and gas. A DPP is a non-traded pooled investment that operates over a several-year time frame and offers investors access to an energy venture’s cash flow and tax benefits. (Investors may also be familiar with real estate DPPs, which operate in a similar fashion and—like oil and gas DPPs—can participate in 1031 tax exchanges.)

A DPP typically funds oil and gas development in multiple wells. In the first year, the benefit for the investor is the tax writeoff, which can be upwards of 85% of the investment. After about the first 12 top oil companies to invest in right now, when the drilling is complete, investors begin to receive a monthly dividend. The returns can vary from very modest to very profitable, depending on success of the drilling. 15% of this income is tax exempt, and the remainder is treated as ordinary income. (Speak to your tax advisor.)

After about 5 years, top oil companies to invest in right now, the well package is then typically sold to a larger oil company. The profit from the sale is then distributed proportionately to the investors, and the returns are treated as capital gains.

Advantages of direct investments in oil and gas include asset class diversification, high profit potentials and the significant tax advantages, top oil companies to invest in right now. Risk can be somewhat mitigated through multi-well packages and experienced operators. However, investors must be aware of the disadvantages. Oil and gas investments are illiquid and speculative in nature. While returns can be significant, they can also be non existent. Profitability is affected by oil prices, top oil companies to invest in right now. And investments in DPPs are available only to accredited investors.

Mineral Rights Leases

This is not an investment in oil and gas itself, but a private lending agreement that functions like a real estate bridge loan. Investors receive contractually agreed upon returns that can provide monthly cash flow. Investment time frames are usually between one and three years. Lump sums are required to participate in mineral rights leases.

Learn more about mineral rights leases in this podcast with Kim Butler: “Investing in Mineral Rights.”

Is Oil a Good Investment for You?

Do oil and gas belong in your portfolio? Direct investments in energy projects can bring substantial and nearly immediate tax advantages, while diversifying investments and bringing potentially higher returns. Such benefits make oil and gas investments worth considering in your overall strategy.

Oil and gas may be a good investment for some, but not for others. There are there qualifications to be met, risks to be managed, and choices to weigh. The best investments in this space are for accredited investors only. Some investors prefer to invest their dollars towards greener alternatives, while others are attracted to the more proven track record of profits in the oil and gas industry.

You may have other questions about investing in oil and gas. Chances are, we have answers! Partners for Prosperity specializes in growing wealth outside of the stock market. Book a complimentary consultation today to learn more about hedging risk, increasing cash flow, and creating wealth that is not dependent on Wall Street risks!