ASX energy shares have long been seen as defensive, given the non-cyclicality of their earnings. With tensions high around the US–China trade war and Brexit in 2019, many investors have been keeping an eye on the sector for defensive exposure.
But as bushfires continue to burn across the country, there is increasing pressure on the Federal Government to establish a long-term energy policy. One of the big barriers facing ASX energy shares in recent times has been a lack of clarity around policy.
With that in mind, I think the sector could be worth watching in 2020 as the big players look to cash in for the long-term.
It was pretty hit and miss for the ASX energy shares in 2019, but which Aussie companies should you be buying in 2020?
3 ASX energy shares in the buy zone
Origin Energy Ltd (ASX: ORG) is one of my top ASX energy shares for 2019. The Aussie ‘gentailer’ is a major player in the national electricity market alongside AGL Energy Limited (ASX: AGL) and EnergyAustralia.
The Origin share price has rocketed higher in recent times and climbed 28.17% in the last 12 months. Origin also offers a tidy 2.91% dividend yield to investors at a price to earnings (P/E) multiple of just 12.5 times.
In contrast, 2019 was an underwhelming year for AGL shareholders. The company’s shares basically flatlined in the last 12 months after a difficult period for the group. While east coast electricity prices remain high, fluctuating oil prices created some volatility in 2019. AGL shares are yielding 5.78% at a P/E of 15 times, which could mean there is some tactical value there.
If you’re looking for more exposure to oil and gas, Woodside Petroleum Ltd (ASX: WPL) could be worth buying. The Woodside share price rocketed higher in 2019 and remains well-placed this year.
Overall, the ASX energy shares could be in the box seat with more Federal Government energy policy on its way in 2020. The recent bushfires have thrust the national climate debate into the spotlight to start the year and I’d expect the government to be trying to solidify its policy response, which could help long-term energy investment.
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Motley Fool contributor Kenneth Hall has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.