FX.co ★ 3 investment solutions amid bullish trend in commodity market

EOG Resources

EOG Resources is one of the largest shale oil producers in the US. The company boasts the lowest production costs among other drilling companies. EOG is engaged in hydrocarbon exploration in six shale basins that accounts for wide diversification of its activities. With this approach, the company exploits each commodity under the best possible conditions that ensure high profits. Besides, EOG finds it easier to adjust to demand fluctuations than American energy giants like ExxonMobil and Chevron. Oil prices are currently higher than the breakeven level at EOG. Taking advantage of this situation, the company allocates its free cash flow for debt repayments, stock repurchases, and increasing dividends. In 2021, EOG raised dividends by 10%, thus surpassing corporate earnings forecasts for Q4.

Marathon Oil

Marathon Oil is another lucrative company whose stock has been already spotted by ambitious investors. It runs a gigantic oil refining facility. Oil servicing companies and oil refineries took the brunt of the pandemic-induced energy crisis. However, Marathon Oil in tandem with Valero Energy, an oil servicing company, proved remarkable resilience amid the crisis. The management board of Marathon Oil believes in the company’s bright prospects, making every effort to ensure its recovery. One of such measures is that the board has resumed payouts of dividends which are now a bit lower than they used to be. Shareholders are paid 3 cents per share against 5 cents per share before the crisis. Nevertheless, such modest dividends are projected to generate a forward dividend yield of 3.03% per annum. Since early 2021, Marathon Oil’s stock has surged by 69.4%. Analysts are bullish about the company’s prospects because of a solid balance sheet and considerable investments.

Albemarle Corp.

Albemarle Corp. is ranked third among best performers in the commodity sector. The company owes its success to a rally of lithium prices as Albemarle Corp. is one of the leading producers of this metal. Experts estimate that the global supply of lithium will turn scarce by 2025. Such a scenario will come true in case lithium prices go up. So, in 4 years the lithium supply will not be enough for the production of electric vehicles so that manufacturers of electric cars will have to deal with steadily growing demand. According to Eric Norris, Albemarle Vice President and Global Business Director, lithium producers have to cover a huge gap to cope with increasing demand of electric vehicles manufacturers. Demand for the metal is set to grow throughout 2021. Albemarle Corp. reckons it will be able to gain 30% profits from the bullish trend in the lithium market. Analysts point out that the company is on track to expand its production capacities that will yield high profits in 2021 – 2022.