The energy sector continues to be a hotbed of opportunity in May 2024. While some stocks have soared alongside surging oil and gas prices, others offer compelling valuations for investors seeking a bargain. Here, we’ll delve into two cheap energy stocks to buy now, exploring their latest news and why they might be intriguing additions to your portfolio.
Are Cheap Energy Stocks a Good Investment?
Before diving into specifics, let’s address the question: are cheap energy stocks a smart buy?
- Pros: The global energy market remains tight, with supply struggling to keep pace with demand. This translates to potentially significant upside for companies that can capitalize. Additionally, some cheap energy stocks may offer high dividend yields, providing a steady stream of income.
- Cons: The energy sector is cyclical, meaning boom times can be followed by busts. Volatility can be high, and stock prices can be heavily influenced by unforeseen factors like geopolitical events.
NGL Energy Partners LP (NYSE: NGL)
- News: NGL Energy Partners is a diversified midstream MLP (Master Limited Partnership) that provides crucial services to the energy industry. Recent news includes the company successfully paying off all outstanding preferred unit distributions, demonstrating a commitment to financial health. Additionally, NGL announced the sale of non-core assets, streamlining its operations and potentially boosting profitability.
- Financials: With a market cap hovering around $742 million, NGL offers a chance to invest in the energy sector without breaking the bank. The company boasts a healthy 1.66 beta, indicating its stock price tends to move more significantly than the broader market. While they don’t currently offer a dividend, analysts project continued growth for NGL, with a potential upside of 10-15% in the next year.
- Why NGL Stands Out: NGL’s unique advantage lies in its diversified midstream operations. They handle the transportation, storage, blending, and marketing of various energy products, including crude oil, natural gas liquids (NGLs), and even renewables. This diversification helps mitigate risk compared to companies solely focused on a single resource. Additionally, NGL’s focus on essential midstream services positions them to benefit from any uptick in energy production.
Uranium Energy Corp (NYSEAMERICAN: UEC)
- News: Uranium Energy Corp (UEC) is the world’s second-largest uranium mining company by resource base. The company recently announced the acquisition of a significant uranium project in the United States. This move strengthens UEC’s position as a domestic supplier of uranium, a critical component for nuclear power generation.
- Financials: UEC trades around $4.50 per share, with a market capitalization of under $1 billion. While the stock price is lower than NGL, it also comes with a higher degree of risk. However, analysts are cautiously optimistic about the future of uranium, with potential price increases on the horizon.
- Why it’s Unique: UEC offers exposure to the potential resurgence of nuclear power. With growing concerns about climate change, nuclear energy is receiving renewed attention as a clean and reliable source of baseload power. Additionally, UEC’s focus on domestic uranium production could benefit from government support for a secure domestic energy supply.
Cheap Energy Stock To Buy Now – Important Considerations
Cheap energy stocks can be a tempting proposition, offering the potential for significant upside in a tight market. However, they also come with a hefty dose of risk. Before taking the plunge, conduct thorough research on the specific company and the broader energy landscape. Consider factors like the company’s production capabilities, diversification across different energy sources, financial health, and its vulnerability to external pressures.
Remember, investing is a marathon, not a sprint. Cheap energy stocks can be a valuable addition to a well-diversified portfolio for investors with a high-risk tolerance and a long-term investment horizon. However, for those seeking stability and lower volatility, other sectors might be a better fit. Ultimately, the decision of whether or not to invest in cheap energy stocks is a personal one that requires careful consideration of your individual risk profile and investment goals. Seperate yourself from the pack! While reading this article is a good start, there are some advantages you could potentially be missing out on. Have you heard of the Wealth Advisory? The Wealth Advisory isn’t just about one, two, or even three money-making opportunities. Its’ about teaching you how to create long-term wealth and achieve even your most ambitious financial goals. Check out the latest from the Wealth Advisory right here.
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