MPLX is in an excellent position to continue increasing its distribution at a healthy rate. It produces lots of stable cash and has a conservative payout ratio. It generated roughly enough cash through the first nine months of this year to cover its distribution, capital spending, and a couple of acquisitions. And it has a cash-rich balance sheet with a low 3.4 times leverage ratio (well below the 4.0 times its stable cash flows could support).

The MLP is investing to continue expanding its midstream footprint, which is growing its capacity and cash flow. The company has several projects underway, giving it visibility into its growth through 2026.

MPLX is the complete package for investors. It offers an attractive combination of income and growth at a reasonable valuation. Because of that, it still looks like a great buy right now for those comfortable with investing in an MLP, which sends investors a Schedule K-1 federal tax form each year.

Neha Chamaria (Occidental Petroleum): Shares of Occidental Petroleum have been a big laggard this year, trading 15% lower in 2024 as of this writing. Investors may have been worried about the impact of the recent fall in oil prices on a company saddled with debt, but they’re perhaps overlooking Occidental Petroleum’s latest move. The oil and gas giant is doing what it should — boosting cash flows and repaying debt, making Occidental stock the kind you’d want to buy while the opportunity lasts.

Occidental just reported strong profits for its third quarter despite a drop in commodity prices, thanks in part to higher production driven by a recent acquisition. Occidental acquired CrownRock in August for roughly $12 billion, including debt, and expected the acquisition to be immediately accretive to its cash flows. In Q3, Occidental delivered its highest operating cash flow so far this year.

More importantly, Occidental committed to divesting assets and repaying debt worth around $4.5 billion within a year of acquiring CrownRock. The company is off to a great start, repaying debt worth $4 billion in the third quarter alone, within just two months of closing the acquisition.

Thanks to CrownRock, Occidental raised its full-year production guidance for the Permian Basin, so I expect the company to continue to generate strong cash flows and pare down debt. A strong balance sheet is perhaps the biggest forte for a commodity stock, and Occidental is slowly but surely getting there.

Before you buy stock in Chevron, consider this:

The Motley Fool Stock Advisor analyst team just identified what they believe are the 10 best stocks for investors to buy now… and Chevron wasn’t one of them. The 10 stocks that made the cut could produce monster returns in the coming years.

Consider when Nvidia made this list on April 15, 2005… if you invested $1,000 at the time of our recommendation, you’d have $870,068!*

Stock Advisor provides investors with an easy-to-follow blueprint for success, including guidance on building a portfolio, regular updates from analysts, and two new stock picks each month. The Stock Advisor service has more than quadrupled the return of S&P 500 since 2002*.

See the 10 stocks »

*Stock Advisor returns as of November 11, 2024

Matt DiLallo has positions in Chevron. Neha Chamaria has no position in any of the stocks mentioned. Reuben Gregg Brewer has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Chevron. The Motley Fool recommends Occidental Petroleum. The Motley Fool has a disclosure policy.

Energy Stocks Have Soared This Year, but, These 3 Still Look Like Great Buys was originally published by The Motley Fool