Introduction : Asx Energy Stocks
Australia has one of the fastest deployment rates of renewable energy worldwide and is on track to reach 50% renewable electricity in 2024 and 100% in 2032. Australia is considered one of the major economies in terms of renewable deployments. Wind power is one of Australia’s main sources of renewable energy, generating enough electricity to meet 7.1 percent of the nation’s total electricity demand. Solar power generated approximately 10% of Australia’s electricity in 2020–21 and is the fastest-growing generation type in Australia. More than 30% of Australian households now have rooftop solar PV, with a combined capacity estimated to exceed 11 GW. Solar farms that are large in size are also on the rise in Australia, with almost 7 GW of generation connected to Australia’s electricity grid. The prospect of nuclear power in Australia has been a topic of public debate for a long time. Australia has one nuclear plant in Lucas Heights, Sydney, which is not used to produce nuclear power but instead is used to produce medical radioisotopes. The Australian Government has legislated emissions reduction targets of 43% by 2030 (on 2005 levels) and net zero by 2050. Energy efficiency and performance play a key role in enabling Australia to achieve these targets. The government of Australia is deploying $15.2 million to develop a Commonwealth-led national energy performance strategy. The strategy will provide a national plan to accelerate energy efficiency and electrification. The government is putting effort into close coordination with the state and territory governments and has been in consultation with stakeholders in developing the strategy to ensure an economic approach to improving energy performance across the country and minimizing costs to a significant level for households, businesses, and industry.
Investing in ASX Energy Shares
Investors must understand that ASX energy shares performance is highly correlated with energy price fluctuations. ASX energy stocks rise when there is significant demand growth, and vice versa. Australia has a mature energy industry.
In FY2022, the value of natural gas across Australia was estimated at over $366.43 billion, an increase of 34.59% from the previous year's $272.3 billion. In fiscal year 2020, the value of natural gas was $289.24 billion. The invasion of Russia in Ukraine, which led to war in early 2022, created a supply shock in Europe, which subsequently raised gas prices to an unbearable level and left the whole world confronted with supply chain issues for commodities.
Australia has gained a significant position in terms of coal producer, exporter, and coal reserve in the whole world. In December 2020, the total resource of brown coal was evaluated at 436,652 metric tonnes, of which the recoverable EDR was 74,039 metric tonnes. In 2020, coal exploration expenditure was $291.6 million, an increase of 27.2% over 2019 ($229.3 million). Much of the expenditure occurred in Queensland, and coal exploration was approximately 10% of the 2020 total exploration spend (Australian Bureau of Statistics, 2022).
But, following certain rules of investing, one must do better research work before investing in energy shares.
What are ASX Energy Stocks?
There are Australian energy-based companies listed on the Australian stock exchange called ASX energy shares, and traders buy and sell these ASX energy shares. There are blue-chip, mid-sized, and small-cap companies involved in exploration and mining activities in Australia. Some good ASX energy companies that are ASX energy shares from higher market cap to lower market cap (dated as of September 1, 2023) are as follows:
• Woodside Energy Group Limited (ASX: WDS) has a market cap of $71.43 billion.
• Santos Limited (ASX: STO) has a market cap of $25.38 billion.
• Ampol Limited (ASX: ALD) has a market cap of $8.23 billion.
• Yancoal Australia Limited (ASX: YAL) has a market cap of $7.28 billion.
• Whitehaven Coal Limited (ASX: WHC) has a market cap of $5.31 billion.
• Viva Energy Group Limited (ASX: VEA) has a market cap of $4.90 billion.
Pros of Investing in ASX Energy Shares
ASX energy companies provide the electricity, which is a basic need for day-to-day life and is primarily used to power homes and businesses, and the fuels used to power transport, which play a vital role in the functioning of the economy. Energy consumption has substantially grown and shows no sign of slowing down. Demand is ramping up across many countries. The government's shift to a commitment to reducing emissions has gained significant momentum in recent years. ASX energy shares can also provide diversification benefits for the portfolio. For example, while the prices of most stocks have been fluctuating faster since the onset of the Russia-Ukraine war, post-2022, energy prices have taken a heavy correction, and the ASX energy shares have also moved faster on the downside from their all-time high. Investment at a lower and fair price for energy shares will be advantageous in the long run when the price starts to shoot up again in the future.
Top Energy Stocks on the ASX 2023
The Australian energy sector has been categorized into two segments: Energy equipment and services covering oil and gas drilling and services-based companies The other category is oil, gas, and consumable fuel industry companies involved in discovery, production, refining, marketing, storage, and transportation. Some of the top energy
Woodside Energy Group Limited (ASX: WDS)
Woodside Energy Group Limited (ASX: WDS), with a market cap of $71.43 billion and a current market price of $37.60 (as of September 1, 2023), is an oil and gas company engaged in exploration, development, and marketing.
Santos Limited (ASX: STO)
Santos Limited (ASX: STO), with a market cap of $25.38 billion and a current price of $7.81 (as of September 1, 2023), is a low-cost producer of oil and gas committed to cleaner energy and clean fuel production with operations across Australia, Papua New Guinea, Timor-Leste, and North America. Santos has been supplying energy to Australia and the Asia-Pacific region for many decades.
Ampol Limited (ASX: ALD)
Ampol Limited (ASX: ALD), with a market cap of $8.25 billion and a current market price of $34.63 (as of September 1, 2023), is an independent Australian company engaged in transporting fuel and convenience retail sectors. Its business involves buying, refining, distributing, and marketing petroleum products, as well as running convenience stores. The company's main segments include convenience retail, fuels and infrastructure, and Z Energy.
Frequently Asked Questions F.A.Q
Are ASX Energy Stocks a good Investment?
Australia has a mature energy sector. ASX energy shares have the potential to return value for investments and also provide good dividends, which makes them attractive to many investors. There is a number of energy stocks of varied sizes listed on the ASX. These range from multibillion-dollar to small-cap Company, which gives investors a broad range of potential investments to choose from. The energy market covers different industries that allow investors to pursue different goals. There are blue-chip growth companies, income-based opportunities, high-risk exploration companies, and penny companies.
What is the best energy stock to buy now?
Multibillionaire company Santos Limited (ASX: STO), with a market cap of $25.38 billion and a current price of $7.81 (as of September 1, 2023), is a low-cost producer of oil and gas committed to cleaner energy and clean fuel production with operations across Australia, Papua New Guinea, Timor-Leste, and North America. Santos has been supplying energy to Australia and the Asia-Pacific region for many decades. The valuations are reasonable at the moment. Investors may consider it, but remember to consult your financial advisor before making a final decision.
What are ASX energy stocks?
These are Australian energy-based companies listed on the Australian stock exchange as ASX energy shares. Some good ASX energy companies that are ASX energy shares from higher market cap to lower market cap (dated as of September 1, 2023) are as follows:
• Woodside Energy Group Limited (ASX: WDS) has a market cap of $71.43 billion.
• Santos Limited (ASX: STO) has a market cap of $25.38 billion.
What is the largest energy company on the ASX?
Woodside Energy Group Limited (ASX: WDS), with a market cap of $71.43 billion and a current market price of $37.60 (as of September 1, 2023), is an oil and gas company engaged in exploration, development, and marketing.
2023 has highlighted a continued focus on energy security, with a number of long-term LNG contracts being signed in the market. Woodside's portfolio, weighted towards gas, has been well positioned for the energy transition. The company has been well planned for major capital investment through 2023 and 2024. The company's capital management supports strong dividends and growth.
What is the best green energy stock to buy?
Origin Energy Limited (ASX: ORG) has a market cap of $15.02 billion and a current market price of $8.72 (as of September 1, 2023). It is an Australian energy company actively involved in the exploration and production of natural gas, electricity generation, and wholesale and retail sale of electricity, gas, and LNG. Origin, one of the best ASX green energy stocks, produces power from solar, coal, wind, pumped water storage, and cogeneration plants.
Are energy stocks dropping?
Post-2022, all the top-notch energy companies started a downward journey in reaction to the inflationary measures taken by the central banks from all over the world. Energy prices are slanting downward, and as the fears of a recession continue to bubble over, energy companies are expected to shed some of their growth in the short term.
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