The widespread COVID-19 outbreak has interrupted distribution networks, depleted demands, and culminated in extraordinary instability for energy stock prices, making it a wild year for energy companies. The overall energy industry is among the few areas of the economy that is now being impacted not just by the coronavirus outbreak but also through climate extremes, industrial disputes, and transformational digital innovations in the last years. As per a study, worldwide energy requirements fell by more than 5% in the previous year, with drops of 8% and 7% for oil and coal, respectively. This resulted in a near-20% drop in energy-related investments around the globe.
On the other hand, energy stock prices in the oil sub sector have rebounded as stocks have settled in late 2020 and now trades at around $45 a barrel. Since early March, that's as close as it can get to the highest rate, indicating that the energy industry's situation isn't quite as bad as it was a few months earlier. As a result, experts are optimistic about the prospects of a few of the top energy stocks.
While we move ahead to 2021, it's critical to assess which energy stock prices are performing favorably and which aren't. Unfortunately, a few energy stocks have been affected so badly that it may take a long time for them to recover. On the other hand, other tenacious companies have recently improved a significant amount to their stock values and might just be in the midst of a resurgence.
The energy industry is a vital component of global commerce. It supplies the fuel necessary for the development of advanced countries. As a result, it's one of the regions with a lot of investment opportunities.
Making investments in energy, on the other hand, can be quite risky. Economic adversities, along with supply-and-demand uncertainty, can make it challenging to identify long-term growth commitments. Making sensible decisions while trading in energy companies, however, can be extremely profitable.
Phillips 66 is an American multinational company situated in Huston, Texas. The company mainly deals in refining and distribution subsectors of the energy industry and has a market valuation of over $28.1 Billion. The company has definitely gone through some tough times, with energy stock prices trading at nearly half of what they were in early 2020. However, if you've studied the energy sector, you'll know that toppled heavyweights like this Phillips 66 possess an indisputable potential that makes them great for investing in the expectations of a revival.
Phillips 66 is, without a doubt, in trouble. Its businesses lost $3.4 billion in the first nine months of 2020, in contrast to $2.3 billion in revenue at the very same time in the previous year. Despite all of this turmoil, Phillips 66 has maintained its investment-grade rankings. The firm's earnings remain focused on reducing liabilities rather than depending too much on it in 2021. This is a dramatic change in mindset, as Phillips 66 gathered substantial debt levels after its split from parent company ConocoPhillips in 2021.
Despite the harsh environment of the energy sector, a firm's financial statement stability and cost curve positions are crucial. The refinery and distribution giant is very well prepared to endure a possibly extended period of falling oil prices. Owing to its magnitude, scalability, and diverse business spectrum, which encompasses refineries, pipeline, chemical products, distribution, and special activities, Phillips 66 is looking at a positive year in 2021. Phillips 66 will benefit from such consistency in times of crisis as it moves ahead. Furthermore, as we approach 2021, its scale and diversity could benefit energy company investors in the coming months.
ConocoPhillips is another American multinational corporation based in Huston, Texas. ConocoPhillips is mainly focused on the oil exploration and production business. The company has a market valuation of more than $42.7 Billion and is one of the biggest energy companies in the US. It has operations all across the globe and produces energy in a variety of ways. Offshore wells, oil and natural gas extraction, liquefied natural gas production, distribution operations, and traditional and nontraditional dwelling are all part of the company's operations.
The company was doing quite well before the pandemic. But as 2020 came with its horrific atrocities, ConocoPhillips' energy stock prices fell due to the drop in energy demands. ConocoPhillips has a robust financial statement to go along with its cheap market rate. It has an investment-grade bond rating and plenty of capital, as well as modest financial leverage. This gives it plenty of leeways to withstand times of low energy stock prices, which frequently occurred in 2020.
As oil prices dropped in 2020, COVID-19 pushed ConocoPhillips to change its strategy. Fortunately, owing to its acquisition with Concho Resources, the energy corporation overcame the slump and emerged even richer.
NextEra Energy is among the biggest electricity transmission businesses in the United States. Its energy supply sector, which provides renewable energy to other corporations and customers across the country, is also the world's pioneer in providing energy from wind and solar energy plants.
NextEra is among the few energy corporations that are unaffected by COVID-19 as well as other economic issues. The company has a major benefit as an energy firm that is not reliant on oil. Power is consumed by people regardless of whether they remain at home or go out. In reality, NextEra Energy's administration has made statements implying that the firm will be disappointed if revenues do not meet the high range of its projection. It is among the few energy stock prices that are performing substantially above pre-pandemic peak levels.
As far as the renewable energy movement is concerned, NextEra Energy has remained well ahead of its competition. It is currently the leading producer of renewable energy owing to the company's initial embrace and enormous advances in sustainable energy.
Although NextEra Energy is one of the top 10 global energy firms, it is the only one that isn't engaged in the conventional oil and natural gas market. However, with the rising political shifts towards clean energy, the company's energy stock prices are expected to go up even further in the coming years.
The energy industry is one of the most exciting stock market sectors for day traders and seasoned investors. If you have experience in stock trading and understand how the energy stock prices fluctuate, then the energy industry can be quite lucrative. However, it can also be a great starting point for new investors. Due to the fast-paced environment, the energy industry helps new investors learn the ropes quickly. However, it should be noted that energy stock prices are quite vulnerable to several factors, and therefore, new investors should start small in this sector and diversify their portfolios.