Russia's invasion of Ukraine last year brought home the stark reality of how brittle energy security is.
With Europe scrambling to replace their gas and petroleum import channel from Russia, energy prices went through the roof.
This accelerated the development of renewable energy projects around the globe. But those efforts take years before meaningful contributions are brought to the energy pool.
Therefore, after years of being out of favour, old sources like nuclear and coal were forced to be deployed to make up for the shortfall.
And this trend doesn't look like it will end anytime soon.
"We think the outlook for energy stocks is attractive because there's just not a lot of supply coming in," Schroders portfolio manager Ray David told The Motley Fool last month.
"No one really wants to invest in fossil fuels or LNG or gas without the high prices to justify the returns, because everyone's quite worried about renewables and the ESG factors."
This means that existing producers can cash in big time.
If you're interested in investing in this area, Glenmore Asset Management portfolio manager Robert Gregory named three ASX shares that he's backing:
3 stocks to buy in a buoyant energy sector
The Stanmore Resources Ltd (ASX: SMR) share price lifted a whopping 15.9% last month.
But for Gregory, the stock still presents value.
"There was no news released. However, the company was likely assisted by a ~12% increase in the hard coking coal price," he said in a memo to clients.
"The stock continues to look attractive based on its free cash flow generation, cheap valuation metrics and low cost of production."
Stanmore shares have rocketed up 250% over the past 12 months.
Bowen Coking Coal Ltd (ASX: BCB) saw opposite fortunes in January, with the stock dropping 12.1%.
"Wet weather in Queensland, where Bowen Coking's mines are located, caused some production issues and also at the Dalrymple Bay Coal Terminal (DBCT) where BCB exports coal through."
The effect is expected to be temporary, though, according to Gregory.
"Whilst the rain had caused some operational issues, the impact was not overly severe and that mining has recommenced at Broadmeadow East and Bluff, the latter which has been assisted by water management initiatives."
The Bowen Coking stock price is currently 42.5% higher than it was a year ago.
Perhaps the best known out of Gregory's coal picks, Whitehaven Coal Ltd (ASX: WHC) saw its shares tumble 10.8% to start the year.
That drop in valuation was largely tied to commodity prices.
"The main driver in the month for the stock price was the -35.2% fall in the thermal coal price, albeit from very elevated levels."
The December quarter result was "in line with market expectations", said Gregory.
"With the report, Whitehaven Coal said it expects 1H23 EBITDA of $2.6 billion, versus $0.6 billion in the prior comparable period."
