Three energy stocks may achieve significant breakthroughs in 2024 based on their robust financial health and strategic advantages. This article highlights three energy stocks with strong fundamentals, making them prime candidates for such breakthroughs.
Operating in high-demand areas like liquefied natural gas (LNG) transportation, these companies are poised to benefit from the global shift toward cleaner energy. Consistent revenue and EBITDA performance in this space underline their potential as LNG trade increases.
The shipping and transportation segment within energy also offers strong investment potential. Companies with solid fixed-rate charter backlogs and high dividend payouts provide financial stability and predictable cash flows, appealing to investors seeking income and growth.
Finally, companies drive growth in the midstream oil and gas infrastructure sector through increased capital expenditures on expanding gas compression and related facilities. These investments, focused on high-return projects, position them well for breakthroughs in 2024 as they meet the growing demand for energy infrastructure.
FLEX LNG (FLNG)
Flex LNG (NYSE:FLNG) specializes in LNG transportation. The company had net income of $33.2 million, with adjusted net income of $37.9 million for Q1 2024. This translates to an EPS of 62 cents with an adjusted EPS of 70 cents. The difference lies in the treatment of interest rate derivatives. Adjusted figures exclude unrealized gains and foreign exchange losses. This shows robust earning capability despite market fluctuations. The company generated revenues of $90.2 million in Q1, aligning closely with the guidance of around $90 million. Adjusted EBITDA of $70.6 million exceeded guidance of $70 million.
Additionally, this consistency reflects operational efficiency and effective cost management. These are essential for sustained growth. Flex LNG’s dividend strategy is crucial. The company announced a quarterly dividend of 75 cents per share. This amounts to $3.125 per share over the last four quarters. The dividend yield is around 11%. This consistent dividend payout shows strong cash flow and focuses on returning value. This reinforces investor confidence and supports stock price stability. Flex LNG’s robust financials highlight its stability.
To sum up, consistent dividend payouts show growth potential, which makes Flex LNG one of the top energy stocks.
SFL (SFL)
SFL (NYSE:SFL) focuses on shipping and transportation. Its EBITDA equivalent cash flow was $152 million in Q1 2024, significantly higher than the previous quarter. The strong EBITDA performance shows operational efficiency and profitability. Net income was $45 million, or 36 cents per share, demonstrating substantial profitability. SFL reported a positive contribution of $2.2 million to profits on capesize bulk carriers. It also gained $3.3 million from fuel cost savings.
Additionally, there was a $1.8 million mark-to-market gain on interest rate swaps. SFL has a history of returning value to shareholders through dividends. The company announced its 81st consecutive quarterly dividend, increasing the dividend to 27 cents per share.
Further, the fixed-rate charter backlog is about $3.6 billion, which provides strong visibility on future cash flows. The backlog is centered around long-term charters to very strong end users and excludes revenues from vessels in the short-term market and new dual-fuel chemical carriers. It also excludes future profit optionality. This extensive backlog ensures steady revenue that supports the company’s growth prospects.
To sum up, SFL’s strong charter backlog and consistent dividends make it a reliable investment choice among top energy stocks.
Hess Midstream (HESM)
Hess Midstream (NYSE:HESM) focuses on midstream oil and gas infrastructure. Capital expenditures for Q2 2024 totaled $72.7 million, up from $52.1 million in the prior year. These funds were directed towards expanding gas compression and infrastructure. The increase in capital spending shows Hess Midstream’s commitment to growth. Investments in gas compression facilities boost throughput capacity and meet rising demand. The company is progressing on multiyear projects, including two compressor stations and pipelines. Increased capital spending in the year’s second half supports ongoing construction and development.
Moreover, Hess Midstream prioritizes returning capital. Since 2021, it has returned $1.75 billion through stock repurchases. This reduced the total unit count by nearly 25%. The reduction in units enhances per-share metrics and increases value. The company increased its distribution per Class A share by 48% since 2021. In 2024, it has increased by over 10% year-to-date on an annualized basis, marking a solid focus on delivering market returns.
Overall, increased capital investment and strong market returns highlight Hess Midstream’s focus on growth and solidify its position among top energy stocks.
On the date of publication, Yiannis Zourmpanos did not hold (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
On the date of publication, the responsible editor did not have (either directly or indirectly) any positions in the securities mentioned in this article.