Warren Buffett's Favorite Energy Stock Paces Bullish Oil Sector Move Amid Ukraine-Russia Attack
Warren Buffett-backed Occidental Petroleum, Diamondback Energy, APA and Halliburton led an early rally in oil stocks Monday as oil prices jumped. U.S. oil prices advanced more than 4% to around $63.60 per barrel on Monday. The move higher comes despite the Saudi Arabia-led Organization of Petroleum Exporting Countries and its allies, including Russia, announced Saturday it would raise oil output in July by the same amount as in the previous two months.
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Yahoo
37 minutes ago
- Yahoo
Why Oil and Gas Stocks Rallied Today
OPEC+ increased supply in line with expectations, leading to a relief rally in oil prices. In addition, Ukraine's daring attack on Russia's long-range bomber fleet increased fears of a geopolitical incident that could further limit Russian oil supply. 10 stocks we like better than TotalEnergies › Shares of major international oil and oil-related stocks such as TotalEnergies (NYSE: TTE), APA (NASDAQ: APA), and oil tanker company Torm plc (NASDAQ: TRMD) rallied on Monday, with the stocks up 2.6%, 4.4%, and 3.4%, respectively, as of 12:45 p.m. ET. TotalEnergies has made strides to become more diversified into renewables, but it still gets over half its operating income from oil and gas upstream production. APA is primarily an upstream oil and gas explorer. And Torm is an oil and gas tanker company involved in global oil and gas transport. Today, oil and gas prices had a "relief rally," as the past weekend's OPEC+ cartel announcements of supply increases weren't as large as feared. Furthermore, Ukraine's daring strike against Russia's bomber fleet over the weekend could potentially escalate the war with Russia, throwing into question Russia's supply on the markets once again. Over the weekend, the OPEC+ cartel announced it would increase oil supply for the month of July by 411,000 barrels per day, an amount in line with expectations. Going into the weekend, some had feared OPEC+ would announce a larger increase. The OPEC+ countries had agreed to voluntary cuts in the neighborhood of 2.2 million barrels per day in January 2024 in order to support oil prices amid stalling growth and growing U.S. production. But in April, the cartel announced it would phase out those voluntary cuts, despite oil prices having fallen this year. While some had feared a bigger surge of production more quickly, it appears the cartel will be phasing in those supply increases more gradually. Additionally, oil prices can surge higher whenever there are geopolitical tensions in oil-producing states. In today's case, it's Russia. We all remember the big surge in oil prices back in 2022, in the aftermath of Russia's invasion of Ukraine. While oil prices have come down this year on the back of tariff-related fears, and perhaps the Trump administration's more Russia-friendly stance leading to sanction relief, Ukraine's daring strike on Russia's long-range bomber fleet this past weekend has raised the prospect of a bigger Russian response. If Russia responds in a big way, it runs the risk of encountering even more sanctions, both on itself and other countries that buy oil from Russia. Russia is the third-largest producer of oil, supplying about 12% of global oil supply. So with that supply now somewhat in question after the past weekend's attack, that's also contributing to the oil price rise. It might seem odd that OPEC+ is increasing production, even though the price of oil has declined in the new year amid the prospect of a macroeconomic slowdown caused by the Trump administration's tariff war. There are potentially several reasons for this. First, some OPEC+ countries were cheating on their quotas anyway, so this is Saudi Arabia's way of punishing them. Second, Saudi Arabia might be trying to curry favor with the Trump administration, which wants lower oil prices and inflation. Third, Saudi Arabia may be moving to a price war strategy to force lower production in U.S. shale, given that Saudi Arabia has the lowest costs per barrel in the world. We actually saw this in the early days of the pandemic, when Saudi Arabia increased oil production even though the world was going into lockdowns, in an effort to bankrupt U.S. shale companies. While today's situation isn't as dire as that, the pivot to competing on price is still not a welcome development for most oil companies. Therefore, today's price increase might end up fleeting, as more production comes online and tariff uncertainty weighs on economic activity. That being said, oil and gas stocks could serve as a valuable hedge against a broader Russia-Ukraine war or increased geopolitical turmoil. So they serve as a valuable component of a diversified portfolio in that respect. Moreover, many oil and gas stocks also pay hefty dividends along the way, while also functioning as a portfolio hedge against that scenario. Before you buy stock in TotalEnergies, consider this: The Motley Fool Stock Advisor analyst team just identified what they believe are the for investors to buy now… and TotalEnergies wasn't one of them. The 10 stocks that made the cut could produce monster returns in the coming years. 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Yahoo
42 minutes ago
- Yahoo
Where Will Costco Wholesale Stock Be in 5 Years?
Costco Wholesale is a fantastic business that continues to grow. Investors have steadily pushed its valuation higher since the pandemic years. What goes up may ultimately come down -- a seemingly unthinkable outcome for such a winning stock. 10 stocks we like better than Costco Wholesale › Maybe it's those famous $1.50 hot dog meals, but Costco Wholesale (NASDAQ: COST) continues to flex its muscles. The leading membership warehouse retailer reported impressive numbers in its most recent earnings report, highlighting the company's robust customer base at a time when consumers are pulling back at many other stores. The stock's long-term performance is legendary. Costco's shares have risen by over 600% in the past decade alone. The company was a favorite of the late Charlie Munger, who, alongside Warren Buffett, helped run Berkshire Hathaway for decades. I crunched the numbers to see whether the stock's future is as bright as its past. Here is where I think Costco Wholesale stock will be in five years. Costco Wholesale is a warehouse store, which sells items in bulk and other products not typically found at discount retailers, such as Walmart or Target. And people need a paid membership to shop there. The beauty of Costco's business model is that it sells its merchandise at razor-thin margins, while generating most of its profits from membership fees. Its secret sauce, though, is the brand power it has built. Costco has made its stores destinations for consumers, who sometimes go out of their way to visit their closest one for perks like discounted gas or the company's famous $1.50 hot dog meal. The branding works so well that it doesn't spend any money on marketing, an incredible fact, considering how competitive the retail space is. Chatter has picked up this year about a slowing economy, and some companies have sounded the alarm on consumer spending. 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Consider when Netflix made this list on December 17, 2004... if you invested $1,000 at the time of our recommendation, you'd have $657,385!* Or when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you'd have $842,015!* Now, it's worth noting Stock Advisor's total average return is 987% — a market-crushing outperformance compared to 171% for the S&P 500. Don't miss out on the latest top 10 list, available when you join . See the 10 stocks » *Stock Advisor returns as of June 2, 2025 Justin Pope has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Berkshire Hathaway, Costco Wholesale, Target, and Walmart. The Motley Fool has a disclosure policy. Where Will Costco Wholesale Stock Be in 5 Years? was originally published by The Motley Fool Sign in to access your portfolio
Entrepreneur
an hour ago
- Entrepreneur
3 remarkable winners amid an unseen surge
Oil prices have been falling as OPEC increases production. Like Trump with trade, the cartel is looking to re-shape the chess board. Here's what investors need to know This story originally appeared on WallStreetZen The dominant story of 2025 has been President Trump using tariffs to restructure global trade. So, many investors are missing another major development as OPEC has been increasing oil production. Notably, this increase in production has come about despite already weakening oil prices. This is not an accident as OPEC is looking to increase its market share. Over the last decade, steadily rising US shale oil production has eroded OPEC's control of the market and resulted in the US becoming a net exporter of energy. WTI Crude oil started the year at around $74 per barrel and currently trades below $60 per barrel. However, shale oil production is only viable at prices above $70 per barrel. 2020 and 2014 The last two major instances of OPEC members increasing oil production were in early-2020 and 2014. And, both instances marked the beginning of multi month declines in oil prices. In 2014, WTI crude dropped from $105 per barrel in June 2014 to below $55 by the end of the year. The major impetus for this increase was the growth in US shale production which was starting to affect OPEC's market share and pricing power. In early 2020, Saudi Arabia decided to increase oil production in an effort to discipline other OPEC members who were not abiding by the cartels' production quotas. As the chart below shows, this resulted in oil prices sliding lower and eventually collapsing as the pandemic temporarily crippling oil demand. Both experiences contain important lessons for investors. 2025 In its first production surge, OPEC didn't materially cut back on supply increases until there was a material decrease in rig counts and shale production. 2020 gives us few clues, since the production surge ended quickly, once the nature and challenge of the pandemic became clear in early March. However, the biggest takeaway is that investors should not ""fight OPEC." A common adage on Wall Street is "don't fight the Fed." Essentially, this means don't be bearish when the Fed is aggressively easing or don't be overly bullish if the Fed is tightening policy. Similarly, investors should have a more risk-averse approach when investing in oil, whenever OPEC is increasing production. What Opportunities Does the OPEC Surge Create? Instead, investors should focus on the consequences of a multi month decline in oil prices, as these are where investment opportunities can be found. For instance, many airline stocks enjoyed spectacular rallies in 2014 and 2015 as lower oil prices boosted margins and profits. In 2020, many shippers enjoyed huge gains as the world was awash in excess oil which had to be stored and transported. Investors should identify stocks with strong fundamentals that have strong quantitative ratings. Then, they can narrow down this list of stocks to find the ones that will benefit from this specific catalyst. The Zen Ratings can help you screen for these stocks. For instance, investors can screen for stocks with an overall A or B rating along with strong component grades for defensive categories like Safety, Value, or Financials. Currently, there are a handful of stocks that fit this criteria. In today's article, I want to discuss 3 companies: United Airlines (UAL), CVR Partners (UAN), and Hallador Energy (HNRG). 1. United Airlines (UAL) United Airlines (UAL) is a major beneficiary of lower oil prices as it reduces costs, boosts margins, and leads to an increase in consumer spending. As oil prices dropped by more than 50% between June 2014 and February 2015, UAL's stock was up by nearly 70%. UAL also brings outstanding financials given a solid balance sheet, low debt-to-equity ratio, and a rock-bottom forward P/E of 6.6 which is significantly cheaper than the S&P 500's forward P/E of 22. The company is also well-regraded by Wall Street analysts as it has 8 Strong Buy ratings and 3 Buy ratings with no Sell or Hold ratings. It also has a consensus price target of $103 which implies 30% upside. Another indication of strong performance is that the company has topped analysts' earnings expectations for 11 straight quarters. Similarly, the Zen Ratings are also bullish on the stock as it has a Strong Buy (A) rating. A-rated stocks have an average annual performance of 32.5% which beats the S&P 500's average annual gain of 10.8%. 2. CVR Partners (UAN) CVR Partners (UAN) produces nitrogen fertilizer, providing farmers with ammonia and other products. A byproduct of reduced shale oil production will be higher natural gas prices, and fertilizer prices tend to rise with natural gas prices. Like UAL, UAN offers a strong balance sheet, low leverage ratios, and an attractive valuation with a P/E of 11. UAN also pays an 8% dividend yield and has consistently hiked dividend payouts over the last decade. While certain segments of the economy are going to lose from tariffs, agriculture is an exception. Either the administration is going to strike deals that will boost exports, or it will provide aid to farmers given their political importance as was the case during the previous trade war in 2018-2019. Given these strong fundamentals, it's not surprising that UAN is rated a Strong Buy (A). The stock has appeal to both value and growth investors. The company's recent earnings reports reveal strong cash flow. Over the last 12 months, the company generated nearly $100 million in cash which is impressive given its total market cap of $825 million. This combination ensures a margin of safety while providing exposure to positive catalysts. 3. Hallador Energy (HNRG) While UAN will benefit from higher fertilizer prices, HNRG will benefit from higher coal prices. Coal prices and natural gas prices tend to move in the same direction. Further, the Trump administration's embrace of coal also removes another major headwind for the industry which led to underperformance for most of the last decade. Essentially, coal stocks were mired in a brutal bear market from 2010 to 2020. Low natural gas prices made it less competitive. At the same time, the government was embracing environmental policies to reduce coal consumption. Now, both of these headwinds have eased, and investors are finding opportunities in the sector. Wall Street analysts are also bullish on the stock as it has 2 Strong Buy ratings and 1 Buy rating with 0 Sells or Holds. In terms of the Zen Ratings, it's rated a Buy (B). B-rated stocks have produced an average annual return of 19.5% which beats the S&P 500's average annual gain of 10.8%. The stock is also a standout in terms of component grades. Out of our universe of 4,500 stocks, it's in the top 3% for Growth. This is consistent with the company's improving outlook given increasing coal production and rising prices. Additionally, it ranks in the top 4% for Safety due to its low levels of debt, leverage, and collection of high-quality assets. What's the Endgame For OPEC's Production Uptick? While the endgame and path for Trump's trade war is unclear, the fallout and conclusion of OPEC's production surge is much more predictable. While North American energy producers are likely to struggle, commodities like natural gas, coal, and fertilizer will benefit. Another winner will be airlines as consumer spending remains strong while fuel costs decline. What to Do Next?
