Beware of These 3 Overvalued Energy Stocks
XOM – Declining supply and higher demand are driving up crude oil prices. However, with the United States shifting its focus toward clean energy, the domestic oil and gas sector is expected to be hard hit in the long run. Thus, relatively overvalued companies like Exxon Mobil (XOM), Chevron (CVX), and Phillips 66 (PSX) may not be able to grow their revenues and earnings enough to justify their valuations in the long run. So, these stocks should be avoided. .
Feb 23, 2021
The oil and gas industry has made a 180-degree turnaround since turning negative for the first time in April last year. With OPEC and OPEC+ announcing a reduction in crude oil production to boost the prices and the Biden administration placing a temporary moratorium on new oil and gas leases and revoking Keystone XL permit, the global oil supply is expected to shrink this year, thereby driving up energy prices. The US Energy Information Administration (EIA) estimates crude oil production to fall from 0.20 million barrels per day to 11.10 million barrels in 2021. The market for the energy sector (Oil and Gas) is expected to grow at a CAGR of 5.34% between 2021 and 2026.