Goldman Sachs Energy Stocks: Top 12 Stock Picks
In this article, we discuss the top 12 Goldman Sachs energy stocks. If you want to skip our detailed discussion on the energy sector, head directly to Goldman Sachs Energy Stocks: Top 5 Stock Picks.
Previously, we reported that global clean energy investment has surged due to COVID-19 recovery and energy crises. In 2023, around $2.8 trillion will be invested in energy, with over $1.7 trillion in clean energy, led by solar. Low-emissions power will account for 90% of total energy investment. Clean energy spending now exceeds the budget for fossil fuels, a shift from five years ago. Renewables and electric vehicles drive this momentum, along with batteries, heat pumps, and nuclear power. Moreover, the Economist Intelligence Unit predicts 1.3% energy consumption growth in 2023, hindered by high prices and economic slowdown. OPEC+ might cut production, impacting oil supply, and Russia faces oil output decline due to sanctions. Natural gas demand remains flat, coal grows slightly, while oil demand is rising in Asia but falling in Europe. Solar and wind energy consumption will grow by 11% in 2023 and continue expanding at 10% annually till 2031, with Asia being the market leader.
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While clean energy continues to dominate headlines, industry leaders during the Energy Asia conference in Kuala Lumpur on June 29, 2023 emphasized that oil and gas will remain dominant energy sources for many years due to the moderate pace of the energy transition. Regarding clean energy, the global requirement is an annual investment of $4 trillion, a goal that is currently far from being achieved, as per John Hess, CEO of Hess Corporation (NYSE:HES). He also commented:
“We think the biggest realization that should come out of this conference ... is oil and gas are needed for decades to come. Energy transition is going to take a lot longer, it’s going to cost a lot more money and need new technologies that don’t even exist today.”
A year ago, in the midst of the war in Ukraine and the resulting energy supply disturbances, Goldman Sachs Research forecasted a shift for the oil and gas sector. The firm expected the industry to transition from a period of limited investment to embracing substantial high-profile projects. Presently, this investment surge has materialized, and this is evident in the energy sector's 70 large-scale projects currently in progress worldwide. This marks a 25% increase as compared to 2020 levels. Per Goldman Sachs, three factors have contributed to the significant increase in energy capex. Firstly, the Russia-Ukraine conflict highlighted the need for energy investments. Secondly, the combination of strong investment profitability and the urgency of the conflict provided compelling incentives for these projects. Lastly, the ongoing post-Covid demand recovery has further propelled the double-digit growth in capex.
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On July 31, 2023, Goldman Sachs increased its global oil demand forecast for the year and maintained a 12-month Brent price projection of $93 per barrel. The rise in inventories offset the demand boost from a more optimistic growth outlook. In July, global oil demand reached a record high of 102.8 million barrels per day, according to Goldman analysts. They anticipate a larger-than-expected 1.8 million bpd deficit in the second half of the year and a 0.6 million bpd deficit in 2024, driven by strong demand. The reduced risk of recession and OPEC's efforts to raise prices contribute to Goldman's expectation of higher oil prices and reduced volatility.
In this article, we look at Goldman Sachs’ top energy stocks, which include SolarEdge Technologies, Inc. (NASDAQ:SEDG), Exxon Mobil Corporation (NYSE:XOM), and Berkshire Hathaway Inc. (NYSE:BRK-A).
Our Methodology
We used Goldman Sachs’ Q2 2023 portfolio and selected the 12 biggest positions in energy companies during the quarter for this list. We have mentioned Goldman Sachs’ stake value and the hedge fund sentiment towards each stock as of the second quarter of 2023. The list is ranked in the ascending order of the firm’s stake value in each holding.
Photo by David Thielen on Unsplash
Goldman Sachs Energy Stocks: Top Stock Picks
12. Suncor Energy Inc. (NYSE:SU)
Goldman Sachs’ Stake Value: $480,907,842
Number of Hedge Fund Holders: 33
Suncor Energy Inc. (NYSE:SU) is an integrated energy company in Canada and worldwide. It operates through three segments – Oil Sands, Exploration and Production, and Refining and Marketing. On August 15, Suncor Energy Inc. (NYSE:SU) declared a C$0.52 per share quarterly dividend, in line with previous. The dividend is payable on September 1. In Q2 2023, the company delivered total upstream production of 741,900 barrels of oil equivalent per day.
Securities filings for the second quarter of 2023 reveal that Goldman Sachs owned 16.4 million shares of Suncor Energy Inc. (NYSE:SU) worth nearly $481 million, representing 0.09% of the total portfolio.
According to Insider Monkey’s second quarter database, 33 hedge funds were bullish on Suncor Energy Inc. (NYSE:SU), compared to 45 funds in the preceding quarter. Paul Singer’s Elliott Management is the leading stakeholder of the company, with 10 million shares worth $293.5 million.
In addition to SolarEdge Technologies, Inc. (NASDAQ:SEDG), Exxon Mobil Corporation (NYSE:XOM), and Berkshire Hathaway Inc. (NYSE:BRK-A), Suncor Energy Inc. (NYSE:SU) is one of the top Goldman Sachs energy stocks.
Artisan International Value Fund made the following comment about Suncor Energy Inc. (NYSE:SU) in its Q4 2022 investor letter:
“Suncor Energy Inc. (NYSE:SU), a Canada-based operator of oil sands mines, refineries and retail gas stations, was the third-largest contributor to return for the year, mainly due to higher oil prices. The share price increased by one third. Notably, the portfolio generated significant returns from energy stocks, including Suncor, Tenaris, Imperial Oil and tangentially Alimentation Couche-Tarde and Seven & i Holdings, both of which are in the gas station business. Given the cyclicality and commodity nature of the oil business, we have sold shares of these investments, including the complete sale of both Tenaris and Imperial Oil.”
11. Cheniere Energy, Inc. (NYSE:LNG)
Goldman Sachs’ Stake Value: $530,803,804
Number of Hedge Fund Holders: 60
Cheniere Energy, Inc. (NYSE:LNG) is an energy infrastructure company that is involved in activities related to liquefied natural gas (LNG) within the United States. It is one of the top Goldman Sachs energy stocks. On August 3, Cheniere Energy, Inc. (NYSE:LNG) reported a Q2 GAAP EPS of $5.61, beating Wall Street estimates by $2.88. However, revenue declined 48.8% year-over-year to $4.1 billion, falling short of market expectations by $290 million. The company also paid a $0.395 per share quarterly dividend on August 16.
As per the 13F filings for Q2 2023, Goldman Sachs held 3.48 million shares of Cheniere Energy, Inc. (NYSE:LNG) valued at $530.8 million, representing 0.1% of the total securities.
According to Insider Monkey’s second quarter database, Cheniere Energy, Inc. (NYSE:LNG) was part of 60 hedge fund portfolios, compared to 67 in the prior quarter. D E Shaw is the largest stakeholder of the company, with 1.42 million shares worth roughly $217 million.
TimesSquare U.S. Mid Cap Growth Strategy made the following comment about Cheniere Energy, Inc. (NYSE:LNG) in its Q4 2022 investor letter:
“Within Energy, Cheniere Energy, Inc. (NYSE:LNG) is an energy infrastructure company that operates liquefied natural gas (LNG) terminals in Louisiana and Texas. Despite reporting inline for the latest quarter, its stock traded down -9%. Contributing factors were Europe had filled its storage ahead of the winter and a recent dip in natural gas pricing. The market for LNG is likely to remain tight for the next several years. Notably, Cheniere paid down $1.3 billion of long-term debt and repurchased $75 million of common stock during the quarter. Cheniere is well positioned to benefit from ongoing tightness in global gas markets.”
10. Energy Transfer LP (NYSE:ET)
Goldman Sachs’ Stake Value: $753,368,419
Number of Hedge Fund Holders: 34
Energy Transfer LP (NYSE:ET), a Texas-based provider of energy-related services, is one of the top Goldman Sachs energy stocks. In Q2 2023, Goldman Sachs owned 59.3 million shares of Energy Transfer LP (NYSE:ET) worth $753.3 million.
On July 25, Energy Transfer LP (NYSE:ET) declared a $0.31 per share quarterly dividend, a 0.8% increase from its prior dividend of $0.3075. The dividend was paid to shareholders on August 21. However, the company fell short of Wall Street estimates on EPS and revenue in the second quarter of 2023.
According to Insider Monkey’s Q2 data, 34 hedge funds were long Energy Transfer LP (NYSE:ET), compared to 35 in the prior quarter. David Abrams’ Abrams Capital Management is the biggest stakeholder of the company, with 17.8 million shares worth $226.5 million.
Miller Value Partners, an investment firm, talked about Energy Transfer L.P. (NYSE:ET) in its Q2 2021 investor letter. Here is what the fund said:
“Energy Transfer LP (ET) rose over the period along with the price of oil climbing 40.59% over the period. The company received positive news that the Dakota Access Pipeline project would not be shut down while the Environmental Impact Statement by the US Army Corps of Engineers is drawn up. Energy Transfer reported strong 1Q results with revenue of $17B surpassing expectations for $11.8B with adjusted earnings before income, taxes, depreciation and amortization (EBITDA) hitting $5.04B ahead of consensus of $2.77B. The company raised full year adjusted EBITDA guidance to $12.9-13.3B from $10.6-11.0B previously, with the increase largely related to the benefits realized from Winter Storm Uri. The company paid down $3.7B in debt during the quarter, using strong cash flow to reduce leverage. The company also announced the issuance of $900M in 6.5% Series H perpetual preferreds with the company using the proceeds to repay debt and for general purposes.”
9. ConocoPhillips (NYSE:COP)
Goldman Sachs’ Stake Value: $767,255,132
Number of Hedge Fund Holders: 62
ConocoPhillips (NYSE:COP) engages in the exploration, extraction, transportation, and commercialization of crude oil, bitumen, natural gas, liquefied natural gas (LNG), and natural gas liquids in the United States and worldwide. In the second quarter of 2023, Goldman Sachs held 7.40 million shares of ConocoPhillips (NYSE:COP) worth $767.25 million, representing 0.15% of the total portfolio.
On August 3, ConocoPhillips (NYSE:COP) declared a quarterly dividend of $0.51 per share, in line with previous. The dividend is distributable on September 1, to shareholders of record as of August 16.
According to Insider Monkey’s second quarter database, 62 hedge funds were long ConocoPhillips (NYSE:COP), compared to 72 funds in the preceding quarter. Harris Associates is the biggest stakeholder of the company, with approximately 15 million shares worth $1.5 billion.
Oakmark Select Fund made the following comment about ConocoPhillips (NYSE:COP) in its second quarter 2023 investor letter:
“ConocoPhillips (NYSE:COP) is one of the largest and most efficient exploration and production companies in the country. The company has an extensive resource base of high-quality drilling inventory in the U.S. and various international locations as well as a growing liquified natural gas business. In our view, the depth and quality of ConocoPhillips’s inventory is a competitive differentiator that is not fully captured in today’s share price. Over the next 10 years, we believe ConocoPhillips will be able to return more than 100% of its current market cap to shareholders via dividends and share repurchases while growing its production at a mid-single-digit annual pace. We believe ConocoPhillips is also among the best managed companies in the oil and gas industry and we are impressed by its history of accretive capital allocation under CEO Ryan Lance. The stock has meaningfully underperformed the broader market year-to-date and is an attractive addition to our portfolio.”
8. Chevron Corporation (NYSE:CVX)
Goldman Sachs’ Stake Value: $840,784,133
Number of Hedge Fund Holders: 73
Chevron Corporation (NYSE:CVX) is one of the top Goldman Sachs energy stocks. On August 16, Chevron Corporation (NYSE:CVX) declared a $1.51 per share quarterly dividend, in line with previous. The dividend is payable on September 11, to shareholders of record on August 18.
Securities filings for the second quarter of 2023 reveal that Goldman Sachs held 5.3 million shares of Chevron Corporation (NYSE:CVX) worth $840.78 million, representing 0.16% of the total 13F portfolio.
According to Insider Monkey’s Q2 database, Chevron Corporation (NYSE:CVX) was found in 73 hedge fund portfolios, compared to 64 in the preceding quarter. Warren Buffett’s Berkshire Hathaway is the leading position holder in the company, with 123.1 million shares worth $19.3 billion.
The London Company Large Cap Strategy made the following comment about Chevron Corporation (NYSE:CVX) in its first quarter 2023 investor letter:
“Initiated: Chevron Corporation (NYSE:CVX) – CVX is an integrated energy and chemical producer. Its upstream segment explores for, produces, processes and transfers energy products. Its downstream segment refines and markets these products in addition to industrial plastics and fuel and lubricant additives. Among the major oil companies, CVX is the most levered to oil and gas production; it has one of the most successful exploration programs and among the best production profiles. CVX also has less exposure to the downstream business, which provides an above-peer operating margin profile and supports CVX’s return on invested capital. CVX has one of the strongest balance sheets in the oil industry with net debt/EBITDA of just 0.1x. The combination of its low cost positioning and strong balance sheet gives us greater confidence in downside protection despite its ties to a volatile commodity. We’re attracted to management’s rational approach to capital allocation, with consideration for the full cycle. In terms of capital allocation, CVX just announced a $75B share repurchase plan, and it pays a healthy 3.5% dividend. We have owned CVX in the past and it is the only Energy exposure in the Large Cap portfolio.”
7. NextEra Energy, Inc. (NYSE:NEE)
Goldman Sachs’ Stake Value: $943,354,933
Number of Hedge Fund Holders: 59
NextEra Energy, Inc. (NYSE:NEE) produces and transmits electrical energy to retail and wholesale clients across North America. The company generates power using sources such as wind, solar, nuclear, coal, and natural gas installations. NextEra Energy, Inc. (NYSE:NEE) is one of the top Goldman Sachs energy stocks. In Q2 2023, Goldman Sachs owned 12.7 million shares of NextEra Energy, Inc. (NYSE:NEE) valued at $943.35 million, representing 0.18% of the total holdings.
On July 27, NextEra Energy, Inc. (NYSE:NEE) declared a $0.4675 per share quarterly dividend, in line with previous. The dividend is payable on September 15, to shareholders of record on August 30.
According to Insider Monkey’s second quarter database, 59 hedge funds were bullish on NextEra Energy, Inc. (NYSE:NEE), same as the previous quarter. John Overdeck and David Siegel’s Two Sigma Advisors is a prominent stakeholder in the company, with 2.56 million shares worth $190.4 million.
ClearBridge Investments made the following comment about NextEra Energy, Inc. (NYSE:NEE) in its Q3 2022 investor letter:
“NextEra Energy, Inc. (NYSE:NEE) is an integrated utility business with a regulated utility operating in Florida and the largest wind business in the U.S. NextEra’s regulated business includes Florida Power & Light, which serves nine million people in Florida. NextEra’s share price rose along with the passage of the U.S. Inflation Reduction Act, which considerably expands support for renewable energy.”
6. Enphase Energy, Inc. (NASDAQ:ENPH)
Goldman Sachs’ Stake Value: $1,009,645,920
Number of Hedge Fund Holders: 50
Enphase Energy, Inc. (NASDAQ:ENPH) manufactures and markets residential energy solutions for the global solar photovoltaic sector. On July 27, Enphase Energy, Inc. (NASDAQ:ENPH) reported a Q2 non-GAAP EPS of $1.47, beating market consensus by $0.20. The revenue increased 34.1% year-over-year to $711.12 million, however, it fell short of Wall Street estimates by $14.86 million.
According to Insider Monkey’s second quarter database, 50 hedge funds were bullish on Enphase Energy, Inc. (NASDAQ:ENPH), compared to 55 funds in the prior quarter. Philippe Laffont’s Coatue Management is a significant position holder in the company, with 612,351 shares worth $102.5 million.
Like SolarEdge Technologies, Inc. (NASDAQ:SEDG), Exxon Mobil Corporation (NYSE:XOM), and Berkshire Hathaway Inc. (NYSE:BRK-A), Enphase Energy, Inc. (NASDAQ:ENPH) is one of the top energy stocks in the Goldman Sachs portfolio.
Aristotle Atlantic Large Cap Growth Strategy made the following comment about Enphase Energy, Inc. (NASDAQ:ENPH) in its Q1 2023 investor letter:
“Enphase Energy, Inc. (NASDAQ:ENPH) designs, develops, manufactures and sells home energy solutions in the U.S. and internationally for the solar industry. The company is the world’s leading manufacturer of microinverters that convert solar-generated D.C. energy to A.C. energy usable in homes and buildings. Enphase introduced the world’s first microinverter system in 2008 and has expanded its offerings to include battery storage systems and proprietary technologies that provide energy monitoring and control services for solar energy systems. It sells its products and solutions directly to solar system distributors, large installers and strategic partners.
We see Enphase having a substantial market share that is gained through a premium product offering, superior customer service and the development of a large and diverse network of solar installers and distributors. The company’s products and services address a growing residential solar market. Coupling battery backup systems with existing and newly installed residential solar systems could accelerate the company’s revenue and earnings growth over the next several years, in our view. Additionally, commercial and international expansion offer additional revenue and earnings upside. Enphase also plans to expand manufacturing capacity in the U.S. during 2023 to benefit from tax incentives related to domestic production included in the Inflation Reduction Act (IRA).”
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Disclosure: None. Goldman Sachs Energy Stocks: Top 12 Stock Picks is originally published on Insider Monkey.