In the tumultuous volatilities and uncertainties of the last six months, if there was a stock category that soared amidst the record-level inflations, it had been the oil industry.

Sky-high demand and supply complications have led to oil prices surging. Oil producers have seen their profit margins expand proportionately against prevailing inflation levels.

The notorious oil stock category sees itself in the spotlight, once again. Investors have increasingly been adding a wide range of oil stocks in US to their investment portfolios.

Investors have also been favoring oil stocks that provide long-term value, despite prevailing market conditions.

With this article, we plan to offer insight as to how one could enhance their portfolio with this underlying strategy.

We present the five most stellar oil stocks in US that are sure to bring in steady long-term gains for anyone holding them in their portfolio.

Best Oil Stocks in US For Long-Term Growth

Investing in oil stocks for long-term growth requires careful consideration. Look for companies with robust exploration and production portfolios, solid financials, and sustainable practices.

Diversification across the value chain can mitigate risks. Monitoring geopolitical events, global energy demand, and technological advancements is crucial.

Patience and a strategic approach are key to navigating this volatile sector. Here we have brought 5 best oil stocks in US for long term growth.

1. Marathon Petroleum Corporation

   We begin our list with the US oil company Marathon Petroleum Corporation (MPC). They’re quite a few reasons why we’re so confident that this specific stock would do your portfolio well.

   First of all, its performance in the last 12 months speaks for itself, with MPC climbing an incredible 49.69%.

   On the other hand, the S&P 500 continues at a slower pace of 13.40%, within the same time. It places MPC among the best oil stocks in US.

   Secondly, the company operates at a significantly large scale, even for the oil refinery sector, and is valued at $48 billion.

   With a daily crude oil refining capacity of almost 3 million barrels, it stands as the largest US oil refinery operator.

   Capacity at such significant levels is crucial, especially in the present context where demand continues to sky-rocket despite limited supply.

   Marathon Petroleum could see record-high profitability given these conditions, which puts it on a path toward enhanced sustainability, well into the long-term.

   If you really want to set your sights long-term, your best bet would be a company like MPC with massive operations that has achieved substantial gains through economies of scale.

   Moreover, in the oil industry, larger companies with robust balance sheets are far more capable of enhancing their share value through financing new oil well discoveries across the globe.

   As of March 31, 2023, Marathon reported cash equivalents worth $11.5 billion, demonstrating its capability to expand its operations when presented with the opportunity.

   In addition to this, the cherry on top for investors with MPC is its forward annual dividend yield of 2.65%

2. Exxon Mobil

   The second stock on our list is the fully integrated supermajor, Exxon Mobil (XOM).

   The company is one that needs no introduction and is the leading name in the realm of energy stocks.

   The primary reason why we chose to include XOM on our list is how it is strategically using the present condition in order to boost its financial sustainability.

   Its attractive scale of operations and structural cost savings are also the reason we have chosen the stock to our list.

   With higher oil and gas prices, coupled with Exxon’s core focus on cost reduction, its profit margins are set to be a game changer for the company.

   Exxon Mobil’s record operating income would allow it to massively bring down its debt to far more manageable levels.

   Analysts point out how the company expects to reduce its total debt from $63 billion in 2020 to only $13 billion by 2024, which in March was reduced to $39 billion.

   From a long-term standpoint, if you want to invest in oil stocks in US, this is incredibly crucial for the company’s investors.

   By lowering its net leverage ratio by such an incredible magnitude, XOM would be extremely well-cushioned against possible oil crashes in the future.

   It is for this reason that any investor thinking long-term should seriously consider this opportunity in Exxon Mobil.

3. Targa Resources

   Up next, we present Targa Resources Corp (TRGP).

   It must be noted that Targa is not as large-scale as some of the biggest oil stocks in US, mentioned on this list, holding a market capitalization of nearly $17 billion.

   Employing less than 3000 individuals on its staff, this mid-sized oil and gas company does hold significant promise.

   The company’s performance and earnings indicate substantial growth which typically is not the case in more established industrial giants.

   For instance, in its recent earnings, its adjusted EBITDA of $940 million, up from $626 million in the prior-year period.

   This impressive figure reflected a growth rate of 12% against the prior quarter. This was 50% higher than the figure of the prior year’s comparable quarter.

   However, it isn’t this emerging oil player’s financial growth that has caught our attention, but rather the brilliance of its management.

   Specifically, its capital allocation really boosts the forward-looking sustainability of the company.

   A series of strategic decisions last year has significantly enhanced the value offering to TRGP shareholders.

   Firstly, it’s the decision to repurchase its interests in its development company joint ventures. By exercising its repurchase option, the company upped its ownership in various ventures.

   Subsequently, it had then sold out a 25% stake in Gulf Coast Express for almost $900 million.

   This covered almost 95% of its acquisition cost and paid off the debt undertaken to complete the move.

   Similar debt maneuvers and bolt-on acquisitions were undertaken throughout 2022.

   Furthermore, a share repurchase worth $224.8 million in December 2022, further enhanced the per-share value for its investors.

   All of this points to the long-term vision of this emerging company, which would be tremendously valuable to investors in the future.

4. Chesapeake Energy

   The fourth stock on this list is Chesapeake Energy Corporation (CHK). We here at Stocks Telegraph feel that CHK is perhaps one of the most underrated oil stocks.

   This is especially justified in terms of its long-term growth potential. The company saw an epic comeback from a bankruptcy filing in 2021.

   Since then, the stock has established itself as a dividend king in the list of oil stocks in US.

   Furthermore, its management expects its free cash flow to almost double during the financial year 2023.

   Moreover, as a result of the company’s post-bankruptcy financial performance, its coverage remains highly strong.

   A further testament to the strength of its balance sheet is the dividend payments it has released so far this year, worth $250 million. The result is a dividend yield at a staggering 11%.

   CHK stands to win big looking forward. This is due to each of the factors discussed above, as well as the external oil price opportunities.

   Currently trading at $82, analysts have set its target price at above $107. This stock is trading at a significant discount, and should not be ignored.

5. Shell PLC

   The final stock on our list, but certainly not the least, is the mega-sized energy and petrochemical company SHELL plc. (SHEL).

   Multinational giants such as Shell are typically perceived as being in a mature phase of their lifecycle. This is where further growth prospects remain relatively low.

   However, the recent financial performance of Shell proves otherwise. In the year’s first quarter, the company reported a revenue figure of $87 billion.

   This was an impressive climb from the prior year’s sales figure of $84 billion. This in large part has been due to enhanced profit margins, coming in this inflationary context.

   Shell has all the markings of a great long-term stock to hold. It is of the largest oil stock names in the market and demonstrates stellar financial performance.

   It also has a robust balance sheet, with cash equivalents worth nearly $42 billion, as of March 2023.

   These fundamentals make Shell a great long-term stock to hold, whilst profiting from the boom and bust strategy. Its earnings per ADS in the first quarter of 2023 stood at $1.25.

   This reflected a huge jump from the prior year figure of 93 cents.

   This contributes to a highly stable dividend program by the company with a yield presently standing at 3.67% making it one of the finest oil stocks in US.

Also, we’ve compiled a list of oil stocks in US for long term growth. These stocks are from US-based firms which have performed well specifically in the past 12 months.

They are expected to show consistent growth over time, providing investors with a steady return on investment.

How To Invest Long Term in Oil?

Investing in oil can be an attractive option for long-term investors seeking to capitalize on the energy sector’s potential.

However, it requires careful consideration and understanding of the dynamics influencing oil prices and market conditions.

Following guidelines will provide you with valuable insights and strategies to help you navigate the world of long-term oil investment.

• Understand The Oil Market

  Before diving into any investment, it’s crucial to have a solid understanding of the oil market.

  Familiarize yourself with supply and demand dynamics, geopolitical factors, and industry trends that can influence oil prices.

  Stay updated with news and reports from reputable sources to identify potential opportunities or risks.

• Choose The Right Investment Vehicle

  There are several ways to invest in oil, including stocks, exchange-traded funds (ETFs), mutual funds, futures contracts, and oil company bonds.

  Consider your risk tolerance, investment horizon, and desired level of involvement to determine which investment vehicle aligns best with your goals.

• Research and Select Oil Companies

  Investing in individual oil companies requires careful research. Evaluate their financial health, production capabilities, management expertise, and exploration projects.

  Focus on companies with a proven track record, strong balance sheets, and sustainable operations to enhance the likelihood of long-term success.

• Monitor and Review Your Investments

  Regularly monitor your oil investments and stay updated on industry developments.

  Review your portfolio periodically to assess performance, re-evaluate your investment thesis, and make necessary adjustments based on changing market conditions.

• Consider Long-Term Trends

  Long-term trends, such as increasing global energy demand, technological advancements, and evolving environmental regulations, can significantly impact the oil industry.

  Consider these trends when formulating your long-term investment strategy to position yourself for success.

How To Analyze Oil Stocks

Investing in oil stocks requires careful analysis and evaluation to make informed decisions. Here are three key factors to consider before buying oil stocks buy:

• A Strong Financial Profile

  When evaluating oil stocks, it’s crucial to assess the company’s financial profile. Look for companies with a solid balance sheet, healthy cash flow, and low debt levels.

  A strong financial position indicates the ability to weather market fluctuations and invest in growth opportunities.

  Analyze key financial metrics like revenue growth, profitability, and return on capital employed.

  Additionally, examine the company’s dividend history and payout ratio to gauge its commitment to returning value to shareholders.

• Low Costs of Operations

  Efficient cost management is essential in the oil industry. Assess companies that have a track record of keeping operational costs low, as this directly impacts profitability.

  Consider factors such as production efficiency, technological advancements, and economies of scale.

  Evaluate the company’s ability to adapt to changing market conditions and implement cost-saving measures.

  Lower costs of operations can provide a competitive advantage and contribute to long-term profitability.

• Diversification

  Diversification is a crucial aspect of analyzing oil stocks. Look for companies that have diversified portfolios across different geographic regions and segments of the oil industry.

  This can include upstream exploration and production, midstream transportation and storage, and downstream refining and marketing.

  Diversification helps mitigate risks associated with fluctuations in oil prices and regulatory changes.

  A diversified company is better positioned to navigate market challenges and capitalize on opportunities in various segments of the oil industry.

Risk Management Is the Key to Investing in The Oil Patch

Investing in the oil patch comes with inherent risks due to the volatility of oil prices, geopolitical factors, and environmental concerns.

Effective risk management is crucial for success in this sector. Here are key considerations for managing risks when investing in the oil industry:

• Geopolitical and Macroeconomic Risks

  Oil prices are influenced by geopolitical tensions and macroeconomic factors.

  Stay informed about geopolitical events, such as conflicts in oil-producing regions, trade policies, and international agreements.

  Monitor macroeconomic indicators like GDP growth, inflation rates, and interest rates, as they can impact oil demand and prices.

  Diversify your portfolio across different regions and sectors to mitigate the impact of geopolitical and macroeconomic risks.

• Environmental and Regulatory Risks

  Environmental concerns and regulations pose significant risks to oil companies.

  Evaluate a company’s environmental policies, sustainability initiatives, and compliance with regulatory requirements.

  Consider the potential impact of climate change policies, carbon pricing, and shifting consumer preferences towards renewable energy sources.

  Companies with a proactive approach to environmental management are better positioned to adapt to changing regulations and consumer demands.

• Financial Risks

  Assess the financial health of oil companies to manage financial risks. Consider factors such as debt levels, liquidity, and credit ratings.

  A company with a strong balance sheet and access to capital is better equipped to withstand downturns in the oil market.

  Analyze financial ratios and indicators to evaluate profitability, cash flow generation, and debt servicing capacity.

Conclusion

Under the prevailing conditions, crude oil faces record-high demand, coupled with supply complications. As a result, the price of this crucial energy commodity has sky-rocketed.

Oil producers face highly favorable profit margins, given the prices charged.

In these conditions, investors would do well to assess which of these players in the oil industry are capable of delivering long-term financial sustainability.

Each of the stocks mentioned above is an ideal fit to ensure you are exposed to the gains that the oil industry has been enjoying while ensuring sustainable growth.

FAQs

Is Oil a Good Investment In 2023?

The viability of oil as an investment in 2023 remains uncertain.

Factors such as increasing global focus on renewable energy, regulatory shifts, and technological advancements pose challenges.

However, short-term demand and geopolitical tensions may still offer opportunities. Diversification and thorough research are crucial for informed investment decisions.

Is Oil Stock a Good Buy Right Now?

Oil stocks can offer potential investment opportunities, but their prospects depend on various factors.

Factors like global oil demand, geopolitical tensions, and environmental concerns impact the industry.

Analyzing market trends, supply-demand dynamics, and company fundamentals can help determine if oil stocks buy is a wise decision at any given moment.

When Is the Best Time to Buy Oil Stocks?

The best time to buy oil stocks buy is when there’s a combination of low prices, favorable market conditions, and positive industry trends.

Factors such as geopolitical events, supply and demand dynamics, and technological advancements can influence the timing.

Careful analysis and staying informed are key to identifying opportune moments for investing in oil stocks.