8 Best Oil Stocks for October 2024

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Oil was the profitable stock market play earlier this year, with exceptional returns in the first quarter. Some shares have since faltered to varying degrees, but oil stocks are still a mainstay in many portfolios.

8 Best Oil Stocks To Consider in 2024

Here’s a short breakdown of eight of the best, along with their current price and market capitalization.

Methodology

The best oil stocks were selected based on a combination of market leadership position, specific industry subsector, future growth potential, dividend yield, and analyst ratings and projections.

1. Occidental Petroleum Corporation (OXY)

Occidental is one oil stock that many added to their watchlist starting in 2022, when the “Oracle of Omaha” himself, Warren Buffett, began loading up shares for his company, Berkshire Hathaway. For those unaware, Buffett is renowned in financial circles as the greatest investor of all time.

Berkshire Hathaway currently holds a 28% stake in Occidental, making it the company’s largest holder. Since initiating a position, Berkshire Hathaway has not only retained its entire stake but has added to it along the way.

If that’s not enough to sway investors, the financials might. Analysts have a consensus “hold” rating on OXY, with a 12-month price target about 36% above current levels. Earnings are projected to grow roughly 8% from 2024 into 2025, but the stock still sits at an attractive price-to-earnings ratio of 12.93.

On top of potential capital gains, Occidental Petroleum also offers investors a 1.76% forward annual dividend yield.

Pros

• Backed by Buffett
• Attractive P/E ratio
• 1.76% dividend

Cons

• YTD return: Approx. -16.41%
• Most oil companies pay a much higher dividend

2. Exxon Mobil Corporation (XOM)

Exxon is the largest oil and gas company in the U.S. by total revenue. It reported $8.24 billion in earnings for the quarter ending June 30.

Following a drastic drop in 2020 due to pandemic-induced declines in demand for oil, Exxon solidly moved higher over the next two years and has rebounded nicely from a dip last fall. The stock has gained 12.82% YTD as of Sept. 26 and sits just a few dollars below its all-time high, set in April 2024. Exxon has a relatively low P/E ratio of 13.49 and a long-term track record of several decades of strong returns. It provides a dividend of 3.37% for its investors, and it’s unlikely to go under anytime soon.

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Pros

• YTD return: Approx. +12.82%
• Long-standing history and industry experience
• Record profits in 2022
• 3.37% dividend

Cons

• Increasing competition from companies expanding shale oil holdings

3. Shell plc (SHEL)

Shell is one of Europe’s largest companies. After reporting $28 billion in profits in 2023, the company boosted its dividend in early 2024.

Recognized internationally due to its familiar red and yellow logo, Shell also has one of the strongest brands on this list. With the company’s roots dating back as far as the 1830s, Shell is one of the most experienced companies in the oil industry, and it’s reasonable to assume it will retain its leadership position in Europe.

Additionally, Shell is one of the oil stocks with the best value. It has a low P/E ratio of 11.59, as well as a 4.21% dividend yield. Cash on hand equates to $38.77 billion, a reasonably large sum for a stock valued at roughly $210.45 billion.

Pros

• Long-standing history and extensive industry experience
• Low P/E ratio
• Massive cash pile
• 4.21% dividend

Cons

• YTD return: Approx. -0.70%
• Underperformed peers in recent years

4. Marathon Petroleum Corporation (MPC)

Marathon Petroleum is one of the largest American oil refiners, with 3 million barrels of oil refined per calendar day. On top of its refining business, MPC has taken control of separate distribution channels. 

Even after three solid years of performance, returning 60.99% in 2021, 86.59% in 2022 and 30.51% in 2023 — on top of its YTD gain of 10.16% already in 2024 — MPC has a minuscule P/E ratio of 8.57 and $4.44 billion in cash on hand as of the most recent quarter. It has beaten analyst estimates for more than four quarters in a row and also offers a 2.02% dividend yield. Analysts have a consensus “moderate buy” rating on the company, with a 12-month price target of $197.69 roughly 21% above current levels.

Pros

• YTD return: Approx. +10.16%
• 2.02% dividend yield
• Diversified business

Cons

• Limited international exposure

5. Marathon Oil Corporation (MRO)

Marathon Oil Corporation is not to be confused with MPC. The pair once traded as one but split in 2011. MRO is a separate business that is involved in oil exploration and production. The company focuses on low-cost, high-margin regions in the U.S. that are oil-rich. It has some exposure to oil internationally through Equatorial Guinea.

Taking a closer look at the financials, it’s clear Marathon Oil is a lot smaller than other best oil stocks by market capitalization, sitting at just $14.47 billion. Marathon had $155 million in cash at the end of 2023, and it’s dividend is on the low side, at 1.70%. 

In Nov. 2023, Marathon expanded its buyback authorization to $2.5 billion. It has also raised its dividend. Both of these aspects inherently increase shareholder value.

Pros

• YTD return: Approx. +7.08%
• Dividend increases
• Share buybacks

Cons

• Limited international exposure
• Hasn’t kept up with MPC’s performance

6. Imperial Oil Limited (IMO)

Imperial Oil has been in business for more than a century. It supplies fuels for both retail and marine customers and creates chemical products and asphalt pavings.

Earnings revisions continue to go higher for the coming year, and the stock has seen continued momentum over the longer term. Even after posting impressive gains of 13.95% over one year and 146.26% over three years, it trades at a reasonable P/E multiple of 9.66 and has a dividend of 2.58%.

Pros

• YTD return: Approx. +13.95%
• Diversified business

Cons

• Low insider ownership
• Sales growth expected to slow next year

7. Suncor Energy Inc. (SU)

Suncor is one of Canada’s largest companies focusing on developing one of the biggest petroleum resource basins in the world. ESG investors should take note of the company’s excellent sustainability track record.

Ten out of 14 analysts watching Suncor call it a “strong buy” or “buy.” With a P/E ratio of 8.44, a 4.45% dividend yield and $1.73 billion sitting in cash heading into 2024, Suncor is another strong oil stock pick.

Pros

• YTD return: Approx. +14.29%
• Low P/E ratio of 8.44
• Attractive 4.45% dividend
• Investing in sustainability

Cons

• Underperformed other major oil companies last year

8. Liberty Energy Inc. (LBRT)

Liberty Energy is unique in that it services oil and gas exploration companies. It tackles the oil industry from the angle of developing new technologies to serve existing oil businesses. This alone could make it a good diversification pick for investors who already own several major oil exploration or development companies. However, the company is still finding its footing.

While analysts have a consensus “buy” rating” on the stock, with a price target about 30% above current levels, they expect to see 27.40% negative earnings growth for 2024. However, things look rosier in the coming year, with analysts expecting growth of 15.80% in 2025.

Pros

• YTD return: Approx. +14.29%
• Innovative long-term business model

Cons

• Newly profitable
• Declining earnings

How To Invest in Oil Stocks

You can invest by purchasing individual stocks, or by purchasing a mutual fund or exchange-traded fund that invests in oil stocks.

Investing apps and online brokers typically have research you can review to learn more about companies and funds you’re interested in investing in. If you don’t already have a brokerage account, you’ll have to open one and fund it via a wire or electronic transfer from a bank account or payment app.

When you’re ready to buy, pull up the security you’ve chosen and tap the “buy” or “trade” button. Then enter the number of shares you want — or, if purchasing fractional shares, the dollar amount you want to spend — and submit the order.

How To Choose Oil Stocks

When it comes to oil stocks, you’ll have to understand that they’re volatile and subject to the swings in the price of the commodity itself.

Which stock is a good choice for you depends on your investment objectives and risk tolerance. Some will prefer relatively stable companies with very high dividends, while others might choose aggressive, speculative companies that could double in price but might not pay much income.

Do some research to understand the difference between the two, and consider speaking with a financial advisor so that you’re matched up with the right type of oil stock.

Why Did Oil Stocks Drop Today?

If you find yourself investing in oil stocks for any period of time, you’ll encounter days — or even weeks or months — when oil stocks are down. The primary reason why oil stocks in general trade down is a weak economy.

As demand for energy is a key factor in oil company earnings, a recession, or even a period of mildly softening economic conditions, can negatively impact oil stock share prices. Oversupply can also soften oil prices, again leading to depressed earnings. This gentle dance of supply and demand is one of the most important reasons for oil stock price fluctuations.

Final Take

It’s a good idea to have some exposure to energy stocks in any portfolio. Oil stocks seem to be one of the most promising sectors to deliver returns in future years, particularly if the economy continues to expand.

Top Stocks To Invest In

Best Energy Stocks

• Gold Stocks
• Lithium Stocks
• Mining Stocks
• Natural Gas Stocks
• Energy Stocks
• Renewable Energy Stocks
• EV Stocks
• ESG Stocks

Best Tech Stocks

• Tech Stocks
• Biotech Stocks
• Artificial Intelligence Stocks
• Semiconductor Stocks

David Granahan, John Csiszar and Daria Uhlig contributed to the reporting for this article.

Data is accurate as of Sept. 26, 2024, and is subject to change.

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