Top 10 Energy Stocks on ASX [2022] | Stake (2023)

Key highlights:

• The top energy stocks on the ASX are led by Australia's gas and coal exporters
• Natural resources are a major reason for inflation and had higher returns than average
• Government intervention could modify future performances

Top energy stocks on ASX

Trading volumes can provide signals for buying and selling opportunities in technical analysis. Greater overall trading levels for stocks tend to come with a large cap. Some energy shares have various business segments, whilst others are single product operations. Many renewables are part of diversified groups or have been taken private by investors in Australia.

Data as of 13/12/2022.

Whether these ASX stocks can maintain past performance remains to be seen. The Australian government has proposed to cap coal and gas prices for at least one year to shield consumers from rising costs. This move could delay future investment decisions and play a role in limiting medium-term supplies. Keeping the energy sector running smoothly over the transition period to renewables is an ongoing challenge.

Start trading the best performing energy stocks on the ASX, sign up here.

Discover the top energy stocks to watch

1. Santos Limited (STO)

Market Capitalisation: $23.62b

Stock price (as of 13/12/22): $7.10

Stake Platform Bought / Sold (1 Jan 2022 - 09 Dec 2022): 61% / 39%

Santos is a major oil and gas exploration and production company. It started operations in the Cooper Basin in the 1960s and has expanded with assets in Papua New Guinea, East Timor and the U.S.A. It's one of Australia’s biggest domestic gas suppliers and a leading liquified natural gas (LNG) supplier in the Asia Pacific region.

The STO share price has benefitted from plans to implement a simplified capital management framework to facilitate higher shareholder returns. It could pay out around 40% of free cashflow from annual operations from FY23. Santos also announced another share buyback of $517m starting in December.

2. Whitehaven Coal Limited (WHC)

Market Capitalisation: $8.26b

Stock price (as of 13/12/22): $9.56

Stake Platform Bought / Sold (1 Jan 2022 - 09 Dec 2022): 57% / 43%

Whitehaven operates and develops thermal and metallurgical coal mines throughout Queensland (QLD) and New South Wales (NSW). They've benefited from increased demand due to sanctions on Russian coal and uncertainty around gas supplies in the northern hemisphere.

Whitehaven remains well-funded, achieving a record average coal price of $581 per tonne and generating $1.55 billion of cash in the September quarter. High prices allowed financial success despite an actual decline in production. FY22 saw the payout of its largest dividend on record of $0.40 per share.

In our list of the best dividend stocks on ASX, Whitehaven can be found along names like BHP, Rio Tinto and Telstra.

3. Origin Energy Limited (ORG)

Market Capitalisation: $12.49

Stock price (as of 13/12/22): $7.25

Stake Platform Bought / Sold (1 Jan 2022 - 09 Dec 2022): 57% / 43%

Origin Energy is an integrated electricity generator, and electricity and natural gas retailer. The company has wind, solar and hydro projects in the pipeline, including the 60MW Yanco Solar Farm and the planned 90MW Carisbrook Solar Farm.

Origin has received a takeover bid from Brookfield and EIG partners to enable a quicker move towards net zero goals at a 60.6% premium to the average November stock price. This move helped the ORG share price rocket to 34% return this year, although the gas price cap could put the deal in jeopardy.

4. Paladin Energy Ltd (PDN)

Market Capitalisation: $2.06b

Stock price (as of 13/12/22): $0.69

Stake Platform Bought / Sold (1 Jan 2022 - 09 Dec 2022): 61% / 39%

Paladin plans to restart the Langer Heinrich mine in Namibia on the back of increased uranium prices. The asset already has a 10 year track record and could produce over 76 million pounds of uranium in the future. There's potential for further resource generation from exploration assets in Australia and Canada.

With first production targeted for early 2024, profitability is some time away. Investors have remained sceptical and the Paladin Energy stock price is down more than 21% over 2022. Although an early investment decision could be rewarded if the expectations of a nuclear industry renaissance come true.

Paladin is featured in our list of top uranium stocks on the ASX.

5. Ampol Limited (ALD)

Market Capitalisation: $6.58b

Stock price (as of 13/12/22): $27.56

Stake Platform Bought / Sold (1 Jan 2022 - 09 Dec 2022): 61% / 39%

Ampol's main activities cover a range of key petroleum businesses, including the purchase, supply, refining, distribution and sale of products. They are the largest transport energy distributor and retailer in Australia with over 1,900 branded petrol stations.

Despite high fuel prices Ampol shares actually suffered a 7% loss in 2022. Earnings were below expectations and jet fuel demand recovered more slowly in the first half of the year. It managed to raise $150m for a sustainability strategy, which would involve cutting carbon emissions and increasing the number of EV charge points.

6. Yancoal Australia Limited (YAL)

Market Capitalisation: $7.90b

Stock price (as of 13/12/22): $5.98

Stake Platform Bought / Sold (1 Jan 2022 - 09 Dec 2022): 64% / 36%

Yancoal owns, operates or holds participating stakes in eleven coal mines located across QLD, NSW and Western Australia (WA). Its production is primarily exported to Asia, as its average annual volumes of thermal coal could power the equivalent of 30 million homes.

Its financial success in 2022 is largely the result of higher realised coal prices. They were 211% higher in the first nine months of 2022 than in the same period last year. Yancoal paid $1.6b in dividends in 2022 and debt repayments of $3.4b over the past year, despite slowdowns in production due to labour shortages and wet weather.

7. Woodside Energy Group Ltd (WDS)

Market Capitalisation: $66.63

Stock price (as of 13/12/22): $35.09

Stake Platform Bought / Sold (1 Jan 2022 - 09 Dec 2022): 55% / 45%

Woodside Energy is a top ten independent company in the global oil and gas market, being boosted by a merger with BHP Group in June 2022. A market cap of $66b makes it the largest amongst ASX energy stocks. They have exploration, development and operation activities across several countries.

They are an important local LNG player, with the product accounting for 48% of its product mix in FY22. Woodside expects its overall production to grow at over 4% CAGR from 2023 to 2027. The WDS share price has risen 54% in 2022 with higher commodity demand and the company became a top five dividend payer on the ASX.

8. Strike Energy Limited (STX)

Market Capitalisation: $706.18m

Stock price (as of 13/12/22): $0.33

Stake Platform Bought / Sold (1 Jan 2022 - 09 Dec 2022): 65% / 35%

Strike Energy is focusing on commercialising its gas discovery in WA and building a fertiliser manufacturing segment for future value addition to the business. They have onshore positions north of Perth and are looking into a potential geothermal power project.

Strike recently increased its shareholding in Warrego Energy (WGO) to 19.9%, a company with nearby gas tenements in WA. STX share price is expected to be affected by Warrego's takeover by Gina Rinehart's Hancock Energy after outbidding Beach Energy (BPT) in December 2022.

9. Renascor Resources Limited (RNU)

Market Capitalisation: $637.48m

Stock price (as of 13/12/22): $0.27

Stake Platform Bought / Sold (1 Jan 2022 - 09 Dec 2022): 64% / 36%

Renascor Resources is developing a vertically integrated battery anode project in South Australia. The outputs from the world's second largest graphite deposit, named Siviour, will be processed into purified spherical graphite (PSG) to be used in lithium-ion batteries.

The RNU share price rose rapidly in recent months after news of securing approval to construct its manufacturing plant and upgrades to its Siviour resource to reach an overall 81% rise in 2022. The outcomes of a $70m raise from institutional investors in December could impact the share price in the short-term.

10. Boss Energy Ltd (BOE)

Market Capitalisation: $749.23m

Stock price (as of 13/12/22): $2.13

Stake Platform Bought / Sold (1 Jan 2022 - 09 Dec 2022): 63% / 37%

Boss Energy plans to enter the latest uranium bull run with its fully permitted Honeymoon mine to produce up to 3.3 million pounds annually. It has $170m of established infrastructure, which includes a plant under care and maintenance when the mine closed in 2013.

The location in South Australia is advantageous, it’s the only state with support from both sides of the government for producing uranium mines. Although investor appetites have been dampened in the short-term with rising interest rates and production seeming far off in late 2023, as the BOE share price has fallen 13% in 2022.

How are energy stocks classified?

The popular Global Industry Classification Standard (GICS®) divides the energy sector into two parts. The first is oil, gas, coal and consumable fuels and the second is energy equipment and services. They can be further organised by business focus, which is usually related to their stage in the supply chain. Energy shares can also be grouped into non-renewable and renewable sources.

Although a wider range of businesses are commonly associated with the sector and are often informally included. Under GICs metals, mining and chemicals would fall under materials. Utilities also have their designation. This means strictly sticking to energy companies won't always cover investments such as lithium stocks and electricity providers.

Energy stocks FAQs

Are energy stocks risky investments?

The sector is known for its cyclical nature. Businesses are capital intensive and often face multi-year waits to complete projects. Attempting to time investment decisions to take advantage of the boom and bust is a risky venture. Some subgroups such as exploration firms generally come with higher uncertainty compared to producers.

Energy prices can be volatile and are greatly affected by factors outside the industry. Oil prices went from being negative during 2020 as demand collapsed due to the Covid-19 pandemic to record highs due to shortages by the end of 2021. Geopolitical events like the Russia-Ukraine conflict and organisations such as OPEC (Organisation of Petroleum Exporting Countries) have an outsized influence on the markets.

There are also safety and environmental concerns with the sector. As carbon emissions are increasingly penalised, some operators are likely to need to significantly adapt their business activities to avoid extra costs.

What has been the best performing energy stocks on ASX?

The details reveal differing performances amongst commodities and sub-sectors in the energy sector. Coal miners had the highest returns due to significant increases in global demand in 2022 from countries exiting Covid-19 restrictions and the fallout from Russia-Ukraine conflict.

In the year to date, the Whitehaven Coal share price was up 246%, Stanmore Resources’ 156% and New Hope Corporation’s 146% by 13 December 2022. Oil and gas prices were more volatile with performances of 54% over the same period by Woodside Energy Group and Strike Energy at 48%. Other commodities also outperformed with Renascor Resources reaching 81%, although uranium companies failed to share this level of momentum.

This does not constitute financial product advice nor a recommendation to invest in the securities listed. Past performance is not a reliable indicator of future performance. As always, do your own research and consider seeking appropriate financial or taxation advice before investing.