Street Calls of the Week
Investing.com -- The UK energy sector presents a compelling mix of stability and high-yield opportunities for investors in 2025, according to recent rankings from WarrenAI. As oil prices fluctuate below $65 and major companies adjust their buyback strategies, finding the right balance between yield, growth potential, and resilience has become increasingly important for those looking to invest in this sector.
Shell PLC (AS:SHEL)
Shell emerges as the top pick among UK energy stocks, offering a solid 4.5% dividend yield with strong analyst support. The company boasts the lowest breakeven oil price among its peers, making it a stability powerhouse in uncertain times. Bank of America has named Shell its "top Big Oil pick" for 2025, highlighting its unmatched cash flow and potential for consensus upgrades. With a fair value upside of 25.7% and analyst target upside of 32.2%, Shell represents a defensive play with strong cash-flow generation capabilities.
In recent news, Shell plc has seen its price target raised by both TD Cowen and Piper Sandler, though Wolfe Research downgraded its rating citing debt concerns. The company was also involved in an arbitration proceeding where a tribunal ruled in favor of Venture Global.
Energean Oil & Gas PLC (LON:ENOG)
For yield-focused investors, Energean offers an impressive 9.9% dividend yield combined with a robust 17.5% return on equity. The company presents a compelling growth story with revenue forecast to increase by 37.3% in 2025. Trading at just 4.2x forward earnings, Energean represents deep value if its growth trajectory holds. However, investors should note its high debt levels (D/E 514.8%), which contribute to potential volatility.
Torm PLC (NASDAQ:TRMD)
TORM stands out with the highest dividend yield among the top energy investments at an eye-catching 32.7%. This comes with a shareholder yield of 22.7% and an attractive price-to-earnings ratio of just 2.6x. However, the company’s -30.4% one-year return serves as a reality check for potential investors. With negative earnings growth and technical indicators suggesting short-term rallies but longer-term weakness, TORM represents a high-yield opportunity that requires careful consideration.
Odfjell Drilling Ltd (OL:ODLO)
Odfjell Drilling has demonstrated impressive momentum with a 66% one-year price return while still offering a respectable 5.4% dividend yield. Analysts are bullish on the stock, with a consensus "Strong Buy" rating and a target upside of 65.9%. The company has received a "GREAT" financial health label, though investors should remain vigilant given the volatility in earnings.
Harbour Energy PLC (LON:HBR)
Rounding out the top five is Harbour Energy, presenting a deep value proposition with significant risk factors. The stock offers a 13.1% dividend yield and analysts project a 47.6% upside potential. With a strong ROIC of 16.5%, there are positive indicators, but these are balanced against concerning metrics including a -16.1% one-year return and negative ROE of -3.5%.
Technical indicators present a mixed picture, with short-term neutral signals but bearish long-term outlook. While revenue growth has surged (+175% in Q2), earnings remain in negative territory.