Energy Sector Gains Attention Amid Sticky Inflation and Supply Disruptions
The energy sector is gaining attention due to sticky inflation, a cautious Federal Reserve, and supply disruptions in the Strait of Hormuz. This has led investors to weigh how higher oil prices and policy uncertainty might affect larger, healthier energy companies across the US, UK, Canada, and Australia.
Three stocks that may be positioned to benefit from these cross currents are ProPetro Holding (NYSE:PUMP), Baytex Energy (TSX:BTE), and Paramount Resources (TSX:POU). These companies offer direct exposure to oil prices, which can be a clear positive for upstream producers.
ProPetro Holding is an energy services company that provides hydraulic fracturing, wireline, cementing, and power generation services. It has a market cap of US$1.33b and is pivoting toward more efficient frac fleets and its PROPWR power business. This could shift the traditionally cyclical service business toward one with more recurring cash flow.
Baytex Energy is a Calgary-based oil and gas producer that acquires, develops, and operates crude oil and natural gas assets across the Western Canadian Sedimentary Basin. It has a market cap of CA$4.20b and focuses on efficiency gains in plays like Duvernay to keep capital costs in check.
Paramount Resources is also a Calgary-based oil and gas producer that explores for and develops conventional and unconventional petroleum and natural gas reserves across large Duvernay and Montney land positions in Alberta. It has a market cap of CA$4.26b and gives direct exposure to Canadian oil and gas.