OPEC's forecasted 2025 surge in global oil demand, driven by China's momentum and a global economic rebound, is set to heighten oil prices. Concurrently, regional conflicts, such as Middle East tensions, Russia-Ukraine developments, and Red Sea shipping assaults, contribute to the upward trend.
To capitalize on this, it could be wise to add robust energy stocks Weatherford International plc (WFRD), ChampionX Corporation (CHX), and Geospace Technologies Corporation (GEOS) to your portfolio for potential gains. Let's understand this in more detail.
OPEC's inaugural 2025 assessment predicts a robust 1.8 million barrels per day surge in global oil demand, surpassing supply growth. The primary drivers are China's momentum and the global economic rebound. The prognosis suggests a potential impact on oil prices as demand outpaces supply in the coming year.
The surge in oil prices is also mirroring the regional disturbances and global uncertainties such as the deepening conflict in Gaza, escalating tensions across the Middle East, unfolding developments in the Russia-Ukraine theater, and ongoing assaults on Red Sea shipping.
Recent days have witnessed heightened conflict in Gaza, marked by intense Israeli military actions, including targeting two hospitals and advancing into a southern coastal district. European Union foreign policy chief Josep Borrell contends that Israel's attempt to eradicate Hamas is faltering, emphasizing the necessity of a two-state solution for a viable path toward peace.
Adding to the upward trajectory of oil prices is the resurgence of tensions in the Russia-Ukraine conflict. A recent drone attack on a Russian fuel export terminal operated by Novatek in the Baltic Sea sparked a fire, prompting a shutdown of operations and contributing to the current surge in oil prices.
Considering this outlook, let’s look at the fundamentals of the three energy stocks.
Weatherford International plc (WFRD)
WFRD delivers equipment and services across the entire spectrum of oil, geothermal, and natural gas well operations, spanning drilling, evaluation, completion, production, and intervention. The company is structured into three segments: Drilling and Evaluation; Well Construction and Completions; and Production and Intervention.
In the fiscal 2023 third quarter, WFRD showcased remarkable achievements, registering yet another quarter of robust top-line growth, margin expansion, and prolific free cash flow generation.
Buoyed by its stellar performance, WFRD has revised its full-year outlook, anticipating continued revenue growth in the fourth quarter. The company projects a remarkable expansion of over 400 basis points year-over-year in adjusted EBITDA margins, coupled with an anticipated adjusted free cash flow exceeding $450 million.
For the fiscal 2023 third quarter that ended September 30, 2023, WFRD’s total revenues increased 17.2% year-over-year to $1.31 billion. Its adjusted EBITDA rose 42.5% from the year-ago value to $305 million. Also, the company’s net income and income per share grew 254.1% and 325.6% from the prior year’s period to $131 million and $1.66, respectively.
The consensus revenue estimate of $5.11 billion for the fiscal year that ended December 2023 indicates an 18% year-over-year rise. Likewise, the consensus EPS estimate of $5.10 for the same period is estimated to grow significantly from the prior year. Moreover, the company topped the consensus revenue estimates in all four trailing quarters.
Shares of WFRD have gained 23.9% over the past six months and 70.3% over the past year, closing the last trading session at $95.29. The stock is trading above its 50-day and 200-day moving averages of $92.91 and $80.74, respectively.
WFRD’s solid fundamentals are reflected in its POWR Ratings. The stock has an overall rating of B, which translates to Buy in our proprietary rating system. The POWR Ratings are calculated by considering 118 different factors, each weighted to an optimal degree.
WFRD has a B grade for Growth, Momentum, and Quality. It is ranked #4 out of 82 stocks within the Energy - Oil & Gas industry.
In addition to the POWR Ratings I’ve highlighted, you can see WFRD’s Value, Stability, and Sentiment ratings here.
ChampionX Corporation (CHX)
CHX offers sophisticated chemistry solutions and advanced engineered equipment and technologies tailored for oil and gas enterprises. The company's operations span across four segments: Production Chemical Technologies; Production & Automation Technologies; Drilling Technologies; and Reservoir Chemical Technologies.
In July of last year, CHX unveiled its latest technological frontier with the inauguration of the CHX Global Technology Center - India. This move could solidify the company's dedication to expanding its footprint in the global tech landscape, emphasizing the development and delivery of diverse cross-industry technology solutions and expertise.
For the fiscal 2023 third quarter that ended September 2023, CHX’s gross profit grew 48.5% year-over-year to $291.86 million. Its adjusted EBITDA grew 14.1% from the year-ago value to $189.54 million.
In addition, adjusted net income attributable to CHX rose 19.3% year-over-year to $80.95 million, while adjusted EPS attributable to CHX increased 24.2% from the prior year’s period to $0.41.
Analysts expect CHX’s revenue to increase 3.8% year-over-year to $3.91 billion for the fiscal year ending December 2024. Moreover, the company’s EPS for the current year is expected to grow 15.7% from the prior year to $1.97. Furthermore, the company surpassed the consensus EPS estimates in three of the trailing four quarters.
The stock has gained 4% over the past five days to close the last trading session at $26.85. It is trading above its 10-day moving average of $26.61.
CHX’s sound outlook is apparent in its POWR Ratings. The stock has an overall rating of B, which equates to Buy in our proprietary rating system.
CHX has a B grade for Momentum and Quality. It is ranked #8 out of 52 stocks within the Energy - Services industry.
Click here to access additional CHX ratings for Growth, Value, Stability, and Sentiment.
Geospace Technologies Corporation (GEOS)
GEOS designs and fabricates precision instruments and equipment essential in the oil and gas sector for acquiring seismic data, facilitating the precise identification, characterization, and monitoring of hydrocarbon-producing reservoirs. The company’s segments include Oil and Gas Markets; Adjacent Markets; and Emerging Markets.
In its fiscal 2023 fourth quarter release, GEOS disclosed a momentous financial achievement, reporting a full-year revenue of $124.5 million, the highest figure recorded since 2014. The company also highlighted a significant milestone in the fourth quarter, securing a $3 million rental agreement for its cutting-edge Mariner™ product, a shallow water seabed seismic data acquisition node.
Additionally, GEOS announced a substantial $5.7 million contract with an international seismic company for specialized geophones tailored for use in their proprietary system, further solidifying its position in the global seismic technology market. The robust performance underscores GEOS's prowess and innovation in meeting industry demands and fostering strategic collaborations.
For the fiscal 2023 fourth quarter that ended on September 30, 2023, GEOS’ total revenue increased 13.3% year-over-year to $29.32 million. Its gross profit grew 142% from the year-ago value to $14.23 million.
Furthermore, the company’s net income and income per common share came in at $4.44 million and $0.33 compared to a net loss and net loss per share of $8.04 million and $0.62 in the previous year’s quarter, respectively.
Shares of GEOS have gained 94.2% over the past six months and 225.3% over the past year, closing the last trading session at $15.32. Moreover, it is trading above its 50-day and 200-day moving averages of $12.63 and $10.18, respectively.
GEOS’ robust prospects are reflected in its POWR Ratings. The stock has an overall rating of B, which translates to a Buy in our proprietary rating system.
GEOS has a B grade for Growth, Momentum, and Quality. It is ranked #5 out of 52 stocks within the Energy - Services industry.
Click here to access the additional GEOS ratings (Value, Stability, and Sentiment).
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WFRD shares were trading at $97.00 per share on Tuesday morning, up $1.71 (+1.79%). Year-to-date, WFRD has declined -0.85%, versus a 1.74% rise in the benchmark S&P 500 index during the same period.
About the Author: Aanchal Sugandh
Aanchal's passion for financial markets drives her work as an investment analyst and journalist. She earned her bachelor's degree in finance and is pursuing the CFA program. She is proficient at assessing the long-term prospects of stocks with her fundamental analysis skills. Her goal is to help investors build portfolios with sustainable returns.
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