Energy stocks outperformed last year, with the sector generally gaining 59% in a year when the S&P 500 dropped 19%. That’s serious performance, the kind that will always delight investors, and it has traders and analysts alike watching the energy sector closely in this first quarter of 2023.
So far, the energy sector is holding back from the action. Inflation appears to be cooling and the Federal Reserve has indicated that it may take a slower pace for future interest rate hikes, both developments that have benefited growth stocks over cyclical shares like energy.
Looking forward, however, we’re likely to see the price of oil rise by the end of 1H23. China is reopening its economy, which will goose demand, while Russia’s exports, which were slammed when that country invaded Ukraine last year, have risen back to nearly pre-war levels. Seasonal demand increases in the US, during the northern hemisphere spring and summer, will also support prices – and that will likely be reflected in share prices.
Against this backdrop, Wall Street analysts are looking into the energy sector, seeking out stocks that are primed for gains – on the order of 40% or better. Potential gains of that magnitude deserve a second look, and we’ve pulled up the details on two such names.
TXO Energy Partners (TXO)
The first energy stock we’ll look at is new to the public markets, having held its IPO just this year. TXO Energy Partners operates as a limited master partnership, with operations in the Permian basin of Texas-New Mexico and the San Juan basin of New Mexico-Colorado. The company is focused on the profitable exploitation of conventional oil and gas sites in its areas of core operations.
TXO Energy Partners has a diverse portfolio of conventional assets that encompass different types of hydrocarbon production methods. These include coalbed methane production, which is primarily located in the San Juan Basin, as well as water and CO2 flood-based production, which is primarily located in the Permian Basin. As of July 1, 2022, the company’s total proved reserves were 143.05…