2 energy ASX shares to buy while inflation is killing everything else: expert

Chaos and uncertainty is reigning. One expert has named a pair of shares to back the only consistently winning sector in 2022.

| More on:
A man in a hard hat puts his finger up to say 'number one' in front of an oil mine

Image source: Getty Images

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

It feels like the world is in chaos at the moment.

Share markets are plunging from inflation, interest rate and energy fears. Last week, NSW and Queensland residents sat in blackouts as power companies took generators offline, and now the national regulator has suspended the wholesale electricity market.

Many experts are warning that even for long-term investors, it may take a while for everything to settle down again.

The only sure bet this year seems to be energy.

Oil and gas prices were already rising. Then Russia stamped into Ukraine in February, which deteriorated supply and turbo-charged the price hikes.

Energy inflation won’t abate for a while because the structural issues facing Australia and the world can’t be fixed quickly

If you want to get in on this thematic, here are two energy ASX shares one expert recommended as buys this week:

Gas prices to stay high for foreseeable future

Shares for South Australian oil and gas company Santos Ltd (ASX: STO) have enjoyed a nice 22% gain since the start of the year.

Fairmont Equities managing director Michael Gable is bullish on the stock.

“We expect gas prices to remain high this year due to the Ukraine war,” he told The Bull.

“It will take time for gas supplies in Australia to increase, which should lift company earnings.”

Gable noted that, between March and May, the Santos share price couldn’t quite break the $8.40 barrier.

But this month, it broke through, giving him confidence that it would elevate to another level.

Just a fortnight ago, analysts at Wilsons named Santos as its “preferred Australian energy exposure”.

“Santos is still one of the cheapest large-cap energy stocks on the ASX – Santos is trading with the lowest implied oil price at US$63/bbl.”

The stock that’s almost doubled this year

The fuel shortages this year have advanced the cause of renewable energies. Nations around the world are realising how valuable such sources could be to avoid their reliance on oil producers.

But the irony is that the 2022 energy crisis has made coal producers very wealthy.

Whitehaven Coal Ltd (ASX: WHC) is no exception, with its shares rising an incredible 85% since the start of the year.

Gable sees the tailwinds continuing for the company.

“Coal prices are expected to remain high due to supply constraints, and we expect this will flow through to Whitehaven’s earnings.”

He advised investors not to worry about the huge leap in the valuation.

“Despite big share price increases this year, the strong uptrend looks sustainable, as there’s no signs of it slowing at this point.”

Plenty of others agree with Gable. 

According to CMC Markets, 10 out of 13 analysts currently recommend Whitehaven shares as a strong buy.

Motley Fool contributor Tony Yoo has no position in any of the stocks mentioned. The Motley Fool Australia's parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

More on Energy Shares

share price ASX mining shares buy coal miner thumbs up
Record Highs

Why did the Whitehaven Coal share price just hit an 11-year high?

Whitehaven shares have been on fire in 2022.

Read more »

a miner wearing a hard hat smiles as he stands in front of heavy earth moving equipment on a barren mine site.
Energy Shares

Here’s why the Pure Hydrogen share price is soaring 22% today

Shares in the clean energy company are flying high on Wednesday.

Read more »

gas and oil worker on pipeline equipment
Energy Shares

ASX 200 energy shares mixed amid bearish oil price outlook

How did a bleak broker note affect energy shares today?

Read more »

A woman standing on a path flanked by big green trees is surrounded by colourful balloons tumbling from the sky.
Share Gainers

Why did the Pure Hydrogen share price pop 21% today?

Why did Pure Hydrogen shares have such an amazing day today?

Read more »

Two miners stand in front of a large black wall of coal.
Energy Shares

ASX coal shares in the spotlight amid fresh supply warnings

Could this be an opportunity for Australian coal company's.

Read more »

A happy woman smiles as she looks at a tablet in a room with green plant life around her.
Energy Shares

AGL share price down amid Fortescue Future Industries hydrogen hub news

Hydrogen news is making headlines for AGL.

Read more »

Santos share price worker in front of oil mine puts thumbs up
Energy Shares

Why is the Woodside share price having such a strong start to the week?

The Woodside share price is rebounding alongside oil prices.

Read more »

A happy woman flies with arms outstretched on her boyfriend's back on the beach at dusk.
Energy Shares

Beach Energy share price climbs on BP deal

Beach Energy shares are defying the broader market sell off on the ASX today.

Read more »