Big Tech earnings, including Alphabet and Microsoft, are in focus as the US economy's resilience surprises despite the likelihood of a recession. ClearBridge Investments recommends defensive stocks like pharmaceutical and beverage companies [8eb9ccfb]. Oil prices ease due to efforts to contain the Israel-Hamas war, creating an opportunity for energy companies like Petroleo Brasileiro (PBR) to refill the Strategic Petroleum Reserve at reasonable prices [0b1f66c3]. Despite falling crude prices, PBR is considered a compelling investment opportunity due to its low valuation and bullish catalysts. Analysts have raised their earnings estimates for PBR, and the company operates in various segments of the energy industry. With its depressed valuation, top Zacks Rank, and bullish technical chart pattern, PBR offers a convincing risk-reward setup [0b1f66c3]. Investing in oil stocks during a recession may seem counterintuitive, but there are reasons to consider it. Despite reduced mobility during an economic downturn, certain oil stocks may benefit from increased individual driving and the need for transportation. Chevron Corporation (CVX) offers relevance across the entire value chain of the energy industry. Kinder Morgan (KMI) operates pipelines and terminals, making it essential for moving energy commodities. Phillips 66 (PSX) focuses on retail and marketing, which could see a boost as people seek new job opportunities and engage in domestic travel. These oil stocks may provide opportunities for contrarian investors [5b72aa3b]. Nine Energy Service Inc (NINE) is a stock in the oil and gas equipment and services industry that has shown positive performance. It ranks higher than 19% of stocks in the industry and has an overall rating above 38% of all stocks. Metrics like scores can help compare stocks and industries, making it easier to find the best stocks to invest in [c0e8a898].
Investors could consider adding fundamentally strong energy stocks Petróleo Brasileiro (PBR), APA Corp. (APA), and Forum Energy (FET) to their watchlists. OPEC projects a surge in fuel consumption for the summer season. OPEC anticipates a significant year-on-year rise in global jet/kerosene fuel demand by 600,000 bpd in Q2 2024. OPEC projects a notable surge in worldwide oil demand, estimating an increase of 2.25 million bpd in 2024 and a further 1.85 million bpd in 2025. The World Bank warns of a potential energy shock if a major conflict erupts in the Middle East. OPEC+ extends voluntary oil output cuts of 2.2 million bpd into Q2 2024. The global oilfield services market is expected to reach $346.45 billion by 2027. PBR's Q1 2024 production of oil, natural gas, and NGLs rose 3.7% from the prior year. APA completed the acquisition of Callon Petroleum Company. FET acquired Variperm Energy Services. PBR has an overall rating of B in the POWR Ratings. APA has an overall rating of B in the POWR Ratings. FET has an overall rating of B in the POWR Ratings. [c821e4e3] [0b1f66c3] [5b72aa3b]
Wells Fargo senior global market strategist Sameer Samana believes investors should buy the dip in the crude oil sector. He believes the sell-off in crude oil has been driven by concerns of slowing economic growth in the U.S. and worries about planned future increases in oil production by OPEC. However, Samana thinks markets are overreacting to both issues and sees an opportunity in commodities and the energy equity sector. Wells Fargo energy analyst Roger Read focuses primarily on U.S. companies but has an overweight rating on Suncor Energy. BofA Securities equity and quantitative strategist Savita Subramanian believes a new U.S. market cycle is underway and that large-cap value stocks, including energy and financials, are set to outperform [5b094025]. Wells Fargo suggests that the recent dip in oil prices presents a buying opportunity for commodities and energy stocks. They believe that investors should take advantage of the weakness in oil prices to add exposure to commodities and the energy equity sector. Wells Fargo expects a rebound in oil prices and notes that oil has fallen 16% from its recent highs but has now breached oversold levels. They anticipate that oil prices may find support in the high $60s or low $70s. The demand for oil is expected to be supported by economic growth, with the U.S. economy likely to avoid a hard landing. International growth is also starting to recover, which should help soften any deterioration in oil demand. On the supply side, concerns about OPEC phasing out production cuts later this year have been a drag on sentiment. However, Wells Fargo believes that it will take some months for this to happen, giving additional time for economies outside the U.S. to continue improving. [174c2d61]