Seven Bull Stocks In Energy – Q4 Update
Monday, November 21, 2021 11:40 AM



Q3 – Portfolio - CLR, COP, CVX, INT, SLB, TSO, VLO

Q4 – Portfolio -  ­ CLR, COP, CVX, CWEI, INT, IOC, TSO

Schlumberger Ltd.  (NYSE:SLB) has been removed as the potential upside seems limited in the next one month.

Valero Energy Corp. (NYSE:VLO) has been removed as the potential upside seems limited in the next one month.

Continental Resources Inc.   (NYSE:CLR)

Continental's strategy is clear. It is focused on oil and liquids-rich unconventional plays in the United States, where its experience, technology and low operating costs should deliver superior returns for its shareholders. It is on track to triple its production and proved reserves from 2009 to 2014, and it has the inventory in hand to complete the task.

In the last three months, the stock gained $14.3 or 27.07 percent. Currently, it is trading in the range of $66.35 to $68.7, compared to 52 week range of $42.43 to $73.48. Stock price has been increasing on the strength of third quarter results. I think there is significant chance of testing $75 (a new 52 week high) by end Q4. Recovery in Cushing market should also help push the stock price up.

ConocoPhillips (NYSE:COP)

ConocoPhillips is the third-largest integrated energy company in the US and the second-largest refiner in the country.

In the last three months, the stock gained $5.68 or 8.93 percent. Currently, it is trading in the range of $68.84 to $69.99, compared to 52 week range of $58.65 to $81.8. However, in the recent weeks the stock price was driven down by poor Q3 results.

Q4 results could also be disappointing as the company sees production for the fourth quarter in the range of 1.56 million to 1.58 million BOE per day, reflecting continuing suspended operations in Bohai Bay and Libya. Full-year 2011 production is expected to be 1.61 million to 1.62 million BOE per day.

Due to their high exposure to commodity prices, large-cap integrated oil and gas companies are deeply undervalued with single digit P/E ratios. ConocoPhillips is no exception. However, the company is trying to improve its fundamentals by repositioning its portfolio which includes asset sales. For instance, the company has announced that it agreed to sell its interests in two U.S. pipeline companies for a total of $2 billion. The two sales are part of the company's $15 billion to $20 billion divestiture program for the years 2010-2012. Moreover, the company is planning to split into two stand-alone companies next year. These strategic actions should drive its stock price up. Therefore, I think there is significant chance of testing $80 by end Q4.

Chevron Corp. (NYSE:CVX)

Chevron Corp. (Chevron) is one of the leading integrated energy companies in the world. In the last three months, the stock gained $4.59 or 4.92 percent. Currently, it is trading in the range of $97.52 to $101.5, compared to 52 week range of $80.41 to $110.01. However, in the last five days, the stock price was driven down by concerns regarding Brazil oil spill. I think the stock price has been pushed to such levels that it now appears attractive. There are several positive factors that make the stock appealing. For instance, the long-term debt for CVX is $9,498.0 million, while the net current assets are $20,687.0 million, which is an indication of financial strength. CVX's EPS growth over the last ten year period is attractive at 341.3%. I think that these factors would bring some parity and close the gap between the current stock price and the prices suggested by valuation models.

World Fuel Services Corp. (NYSE:INT)

World Fuel Services Corp. (World Fuel) is engaged in the marketing and sale of marine, aviation, and land fuel products and related services. I think the company's business model positions it to achieve meaningful results as customers and suppliers are likely to rely on it to help solve the puzzle of a highly complex global fuel market.

In the last three months, the stock gained $8.97 or 28.34 percent. Stock price was driven by third quarter results. Net income attributable to the company for the third quarter ended September 30, 2021 was $52.65 million, or $0.74 per diluted share, compared to $36.75 million, or $0.60 per diluted share, for the third quarter ended September 30, 2010. Revenue for the third quarter of 2011 was $9.51 billion compared to $4.99 billion for the same period of 2010. Net income attributable to the company for the nine-months ended September 30, 2021 was $143.97 million, or $2.02 per diluted share, compared to $107.43 million, or $1.76 per diluted share, for the nine-months of 2010.

Currently, it is trading in the range of $39.42 to $40.66, compared to 52 week range of $28.63 to $42.15. I think that the stock has potential to test a new 52 week high by end Q4.

Tesoro Corp. (NYSE:TSO) 

Tesoro Corp. (formerly Tesoro Petroleum Corp.) is one of the largest independent refiners and marketers of petroleum products in the U.S. The company operates in two business segments: refining (72.4 percent of operating income in 2010) and retail (27.6 percent).

Recently, the company announced that it plans to add 290 retail stations to its current portfolio of nearly 1,200 stations through separate purchase and lease agreements with SUPERVALU Inc. and Thrifty Oil Co., respectively. I am positive that transaction will expand TSO's geographic footprint in its retail business and secure outlets for its refined products.

In the last three months, the stock gained $4.52 or $23.59 percent. Currently, it is trading in the range of $23.39 to $24.25, compared to 52 week range of $14.64 to $29.61. The stock has potential to test $31 by end Q4.

Clayton Williams Energy, Inc.  (NASDAQ:CWEI)

Clayton Williams Energy, Inc. (CWEI) is an independent oil and gas company engaged in the exploration for and production of oil and natural gas primarily in Texas, Louisiana and New Mexico.

In the last three months, the stock gained $13.12 or $24.6 percent. Currently, it is trading in the range of $63.29 to $67.03, compared to 52 week range of $34.5 to $109.45. The stock price has been moving up either due to its luck with hedging or the management’s ability to benefit from hedging operations. The stock has potential to test $115 by end Q4.

InterOil Corp. (USA)  (NYSE:IOC)

InterOil Corp. (InterOil) is an integrated energy company operating in Papua New Guinea and its surrounding Southwest Pacific region. The company operates in four business segments: upstream, midstream, downstream and corporate.

In the last one month, the stock gained $3.43 or 7.31 percent. Currently, it is trading in the range of $48.03 to $50.50, compared to 52 week range of $31.18 to $81.92. The stock has potential to test $55 by end Q4.


 

Sponsors

Advertisement


Advertisement