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

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.

The post 2 energy ASX shares to buy while inflation is killing everything else: expert appeared first on The Motley Fool Australia.

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More reading

• 5 things to watch on the ASX 200 on Thursday
• The Santos share price is up 27% this year. Is it too late to buy?
• ‘Resilient growth profile’: Why this broker is tipping Santos shares to outperform
• This fund manager is optimistic on these 2 leading ASX 200 energy shares
• 5 things to watch on the ASX 200 on Wednesday

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.

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