This year we have seen a broad decline in all major stock market indices. But just like every thorn has a rose, this bear market environment has a bright spot for investors.

While markets are generally weak, the energy sector is performing strongly, with the S&P 500 energy index up 48% year-to-date.

So the question for investors is, does the energy sector have more room to run? According to some Wall Street professionals, the answer is yes.

So let’s run down that path and take a look at two energy stocks that present clear opportunities for investors. According to the analyst community, these tickers are Strong Buys, and while both have already made some serious gains this year, they are set to continue moving higher.

We took the details from Data from TipRanks; here’s a closer look, along with analyst commentary.

ExxonMobil Company (XOM)

In first place is one of the oil companies ExxonMobil. This company is engaged in the production of oil and natural gas; which forms the business unit “Upstream Company” and occupies the main part of ExxonMobil’s operations. In addition to its global hydrocarbons business, ExxonMobil has refining operations in the US and is actively working to develop new, more efficient fuels and low-carbon solutions for a net-zero future.

It all adds up to an industrial behemoth, a behemoth of the $415 billion global economy. In the second quarter of this year, XOM’s revenue was $115.68 billion, a 70% increase over last year’s quarter. On the revenue side, the company reported $17.9 billion, up from $5.5 billion in 2Q11, an increase of 69%. Earnings per share nearly quadrupled from $1.10 in 2Q21 to $4.14 in the current report. In Q2 2022, ExxonMobil generated $20 billion in cash from operating activities.

Of interest to investors looking for a defensive position, XOM pays good dividends with a long history of around 39 years – with a CAGR of 6%. The current payout is 88 cents per share, which annualizes to $3.52 and yields an above-average yield of 3.5%.

In his coverage of this stock for Evercore ISI, an analyst Stephen Richardson writes: “With the global energy system operating under tight supply (some by design, some due to externalities) and still increasing demand (post-pandemic), XOM fits the market theme very well. Pro-cyclical investments in Guyana, the Permian and even downstream now look like a fluke in retrospect. In addition, higher prices are contributing to long-standing portfolio shrinkage, which has been in order, especially for older domestic NG assets. So while production tends to be low compared to guidance (disposals and rights drag), cash generation continues.”

Richardson followed these comments by reiterating his Outperform (i.e. Buy) rating on the stock and maintaining his $120 price target, implying 20% ​​annual upside potential. (To see Richardson’s track record, Click here)

Overall, there is little doubt on Wall Street that the bulls are running XOM; Analysts’ last 10 reviews of the stock split 8 to 2 in favor of Buy over Hold for a consensus rating of Strong Buy. The stock is priced at $99.61 and has an average price target of $109.05, suggesting ~10% upside potential over the next year. (See the XOM stock forecast on TipRanks)

Marathon Petroleum Corporation (GDC)

Let’s focus on the oil companies and one of the largest oil refining companies in North America in the group. With a market capitalization of $50 billion and annual revenues of $119 billion, Marathon Petroleum is the leader in the North American refining market. The company also transports and sells a range of petroleum products operating at 13 operating refineries in 12 states with a total capacity of 2.9 million barrels of oil per day.

Marathon’s operations – as well as its revenues and profits – have been growing in recent years thanks to high oil prices on global markets and high prices for petroleum products such as gasoline and diesel. Marathon posted adjusted net income of $5.7 billion for 2Q12, which translates to an impressive $10.61 per diluted share. That EPS figure was light years ahead of the 67 cents reported in the year-ago quarter.

On the balance sheet, Marathon reported a strong level of available liquidity, with $13.3 billion of cash and cash on hand and another $5 billion available through an existing bank revolving credit facility. This was balanced with $7 billion in debt. The company will report the results for the 3rd quarter on November 1.

All of this supports a robust dividend of 58 cents per common share, last paid in September. The dividend has been paid at this level for the past 11 quarters, and its annual rate of $2.32 per common share yields a yield of 2.25%.

JPMorgan’s John Royal likes what he sees in Marathon Petroleum, particularly its “top-tier balance sheet.” He goes on to praise the “capital return”, “…with over 25% to return to shareholders in 2022 and a high-teens average in 2023-24, well above the next best refiner…we believe MPC also should announce a significant dividend increase in the next few months, which, while expected by the market, could be a catalyst if it beats expectations (JPM +15% in 2023).”

Royall’s comments support his Overweight (ie, Buy) rating on the stock, as well as his $136 price target, which suggests upside of 26% over the next 12 months. (To see Royal’s track record, Click here)

The major oil refiner is reported by 10 Wall Street analysts, whose reviews include a consensus rating of 8 Buys and 2 Holds for Strong Buy. Shares are trading at $107.28, and the average target price of $120.70 suggests upside potential of 12%. (See the MPC stock forecast at TipRanks)

For good ideas for trading stocks at attractive valuations, visit TipRanks’ The best promotions to buya recently launched tool that aggregates all of TipRanks equity information.

Disclaimer: The opinions expressed in this article are solely those of the featured analysts. The content is intended for informational use only. It is very important to do your own analysis before making any investment.

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