European Energy Stocks to Watch as Inflation and Rate Hikes Lift Oil and Gas Prices

Inflation in the euro zone is flaring again, energy prices are surging and the European Central Bank is preparing another rate hike. That mix is shaking up European energy producers and integrated oil and gas stocks in very different ways. Some may gain fresh momentum from higher crude and gas prices, while others could face tougher funding and demand conditions. This article examines how that news affects 3 specific stocks from the screener and what that might mean for your watchlist.

The three stocks discussed below are just a sample from this idea, and the full screen surfaced 12 more European energy producers and integrated oil and gas companies with similarly detailed stories that are not covered here. If you want to go deeper on this theme, head straight to the European Energy Producers & Integrated Oil & Gas screener to identify, filter and analyze the potential high conviction opportunities that fit your own criteria.

Gas Plus (BIT:GSP)

Gas Plus is a mid sized Italian gas producer that directly links this screener theme to what matters most today: exposure to domestic gas prices. The group earns most of its revenue from exploration and production in Italy at about €84 million, with a further €44 million from foreign E&P and around €42 million from retail gas sales, alongside smaller network and other activities. With a market cap of roughly €263 million, it offers investors a pure play on Italian gas with the scale to be visible, yet still firmly in mid cap territory.

Investors looking at European gas producers may find Gas Plus interesting because its business is tightly tied to Italian gas pricing, which is central to this screener theme and to current inflation driven energy moves. Recent analysis points to high quality earnings, rising profit margins and a valuation that screens as well below an estimated fair value, which can be appealing when fundamentals are holding up. On the flip side, a balance sheet funded entirely by external borrowing and an unstable dividend history mean higher sensitivity to ECB rate hikes and less reliability for income investors. If gas prices stay firm, the mix of earnings quality, pricing exposure and funding risk could make Gas Plus one of the more debated stocks in this group.

Gas Plus appears to be an earnings quality story wrapped in a funding puzzle. Get the full picture with the 3 key rewards and 1 important warning sign to see how its pricing exposure balances with that crucial warning sign.

Deutsche Rohstoff (XTRA:DR0)

Deutsche Rohstoff gives you direct exposure to the European energy theme through its crude oil and natural gas exploration and production, while also holding minority stakes in metals and mining projects such as gold, lithium and tungsten. With a market cap of about €407 million, it is large enough to be visible yet still small enough for company specific news and commodity moves to matter.

For investors watching higher oil and gas prices as inflation flares, Deutsche Rohstoff offers a mix of fast growing US onshore production, a sizeable tungsten linked investment in Almonty and a relatively low net debt profile that supports its drilling push. The catch is that a big portion of current earnings comes from non cash items and tungsten exposure, with analysts expecting profit margins to ease back and earnings to decline in coming years. The key question is how long its current earnings strength can last in a market that is already highly sensitive to every move in energy prices and ECB rates.

Deutsche Rohstoff’s accelerating US onshore story and tungsten exposure could be masking where the real risk reward sits. Get the full context in the 4 key rewards and 4 important warning signs (2 are major!)

OMV (WBAG:OMV)

OMV is one of the larger integrated plays in this European Energy Producers & Integrated Oil & Gas screener, combining upstream oil and gas production with refining, fuels marketing and chemicals. Out of about €26.3b in segment revenue, roughly €18.7b comes from Fuels, €10.6b from Energy and €1.4b from Chemicals, with an offsetting intersegment elimination of about €5.1b and €0.5b from Corporate and Other. With a market cap around €22.3b, OMV is a major Vienna listed stock that gives you broad exposure to European crude, gas and downstream margins in a single company.

Rising oil and gas prices are flowing straight through OMV’s integrated model, from upstream realizations to refining margins. This is exactly what this screener is built to highlight. At the same time, the company is leaning into chemicals, plastics recycling and lower carbon projects that could smooth earnings when commodity cycles turn. The trade off is clear. OMV is dealing with a history of earnings volatility, pressure on long term upstream volumes, a generous dividend that is not well covered by free cash flow and a balance sheet reliant on external borrowing as ECB rates move higher. For investors seeking sizeable, liquid exposure to the current energy price spike with a transition story layered on top, OMV may merit a closer look.

OMV’s integrated energy and transition story could be more finely balanced than it looks at first glance. Use the 3 key rewards and 1 important warning sign to see how its sizeable scale and funding profile fit together.

Seeking Alternatives Before The Crowd Moves

Fresh stock ideas can move from under the radar to full momentum quickly. Use these curated screens before the crowd catches on and prices start flying.

• Track companies aiming to compound income while prices are still settling by scanning the 417 dividend fortresses before yields are affected by higher demand.
• Spot potential breakout compounders with strong balance sheets by reviewing the 263 high quality undervalued stocks while they are still dropping hints rather than headlines.
• Position ahead of developments in infrastructure by checking the 39 power grid technology and infrastructure stocks while many of these stories remain under the radar.

This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.

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