3 Energy Stocks Retail Investors Are Watching As Oil Stays Above $90

Oil above $90, a war-disrupted Strait of Hormuz and a more hawkish sounding Fed have pushed energy back to centre stage for investors who care about inflation and portfolio resilience. This mix creates both pressure and potential opportunity, as some producers gain pricing power while others wrestle with higher funding costs. This article breaks down three large integrated oil and gas stocks that appear well positioned in the current macro story.

The three stocks covered next are just a sample from this theme, and the full screen surfaced 67 more companies with equally compelling narratives that are not discussed here. To go broader than this short list, head straight into the Global Integrated Oil & Gas and Energy Producers screener to analyze, compare and identify your highest conviction ideas.

Viper Energy (VNOM)

Viper Energy is a royalty and mineral interest company tied directly into the Global Integrated Oil & Gas and Energy Producers theme, giving you exposure to high oil prices without the heavy operating footprint of a traditional driller. It owns oil and gas mineral and royalty interests across the Permian Basin in the United States and generated about US$1.9b from acquiring oil and natural gas properties. The company has a market cap of roughly US$16.3b, placing it firmly in the large cap bracket within this screener’s universe.

Viper Energy offers pure-play exposure to Permian volumes and oil prices through its royalty model, which benefits from high crude with relatively low operating costs. That profile looks especially relevant while the Iran conflict keeps supply routes strained and oil above US$90, and while higher rates pressure leveraged producers more than royalty owners. However, you still need to weigh up real trade offs. Earnings have been volatile, dividend coverage has not always been comfortable and the business depends heavily on third-party operators to keep drilling. If you want to understand how those moving parts fit together, the full story on Viper’s cash generation, acquisition strategy and payout plans is where the real insight lies.

Viper Energy’s royalty engine ties directly into oil prices and Permian drilling. However, the real story sits in how cash flows, acquisitions and payouts fit together in the analysis report for Viper Energy

Baytex Energy (TSX:BTE)

Baytex Energy is a pure upstream producer in the Global Integrated Oil & Gas and Energy Producers theme, with all CA$1.7b of revenue coming from oil and gas exploration and production in Canada. The business focuses on light and heavy oil, condensate and natural gas from the Western Canadian Sedimentary Basin, including full ownership of the Duvernay and Peace River assets plus the Lloydminster heavy oil hub. With a market cap of about CA$4.9b, Baytex Energy offers large cap exposure to Canadian crude and gas volumes that are closely tied to global pricing.

Baytex Energy provides direct exposure to crude and natural gas prices at a time when war related supply disruptions have kept oil above US$90 and energy is a key driver of inflation. Efficiency gains in core plays and a focus on Canadian assets are reflected in production and free cash flow trends, while an active buyback program and dividend policy are intended to return cash to shareholders. The other side of the story is real risk, including a history of losses, reliance on external debt funding and sensitivity to tariffs or weaker oil. To evaluate the balance among potential price movements, balance sheet risk and capital returns, it is worth looking more closely at how Baytex is executing against its long term plan.

Baytex Energy’s push to turn Canadian barrels into shareholder cash is only half the story. The other half is how its capital returns, debt profile and production plans really line up in the analysis report for Baytex Energy

TransAlta (TSX:TA)

TransAlta is a large Calgary based power producer in the Global Integrated Oil & Gas and Energy Producers theme, giving you indirect leverage to higher oil and gas prices through its fossil fuel heavy generation fleet and power pricing. The company develops, produces and sells electricity across gas, hydro, wind and solar, plus an energy marketing arm, with gas contributing about CA$1.3b of revenue, hydro CA$310 million, wind and solar CA$301 million, energy transition CA$273 million and energy marketing CA$131 million. With a market cap around CA$5.2b, TransAlta sits firmly in the large cap bracket of this screener.

TransAlta positions you at the intersection of rising power demand, data centre growth and an energy price upcycle, while still presenting some real questions you need to answer for yourself. The company reports better profitability and ongoing dividends as it leans on a diversified fleet and new gas projects, and higher fuel and carbon costs can feed into stronger Alberta power prices. At the same time, you are taking on transition risk from older thermal assets, reliance on external debt funding and the need to keep winning long term contracts to support the Keephills data centre build out. The key decision is whether today’s mix of fossil fuel leverage and renewables build provides TransAlta with enough runway to convert cyclical power pricing into durable cash flows.

TransAlta’s mix of fossil fuel cash engines and growing renewables often looks straightforward, yet the real story sits in how its project pipeline and power pricing expectations stack up in the analyst forecasts for TransAlta

Seeking Fresh Alternatives Beyond Energy?

Some of the most interesting breakouts start quietly while attention is glued to oil and gas. Before this momentum flies and the data goes stale, consider acting early.

• Spot emerging leaders before they hit mainstream screens by scanning the 20 high quality undiscovered gems still flying under the radar for now.
• Target reliable income while prices swing by focusing on the 11 dividend fortresses designed to keep paying even when markets feel choppy.
• Follow the build out of tomorrow’s AI backbone by tracking the 55 AI infrastructure stocks before the story is more widely reflected in prices.

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.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team@simplywallst.com