It's Time to Buy Energy Stocks - Investment Ideas
July 06 2011 - 7:00PM
Zacks
Do you own any energy stocks?
Even with crude trading around $100 a barrel and
sky high gasoline prices, energy stocks seem to be out of favor
with most investors.
I hardly hear any buzz about them. Conversely, back
in 2007 and 2008 when crude was soaring to a new high of $147 a
barrel, all anyone wanted to be in were energy stocks.
Where's the love now?
Over the last 6 months, the perfect storm of higher
commodity prices and stronger demand has been taking shape which
means earnings estimates in the energy sector are rising. This
could be just the beginning of an earnings explosion.
It's Time To Get Back Into Energy
Without much fanfare, many energy stocks have been
moving higher over the last six months.
Does that mean it's too late to get in?
Never fear. While shares have moved higher, the
valuations are still extremely attractive. You won't see any
forward P/Es in the 50s or the 60s here like you will with the
popular Internet and technology stocks.
What you'll find is just the opposite. Energy
stocks are actually cheap. Now is the time to bulk up your
portfolio with solid names expected to grow earnings by the double
and triple digits.
Forget Big Oil
There are a lot of ways to "play" energy.
Most investors routinely turn to the large, well
known integrated energy stocks like Dow components Exxon and
Chevron when they're buying energy stocks. There's nothing wrong
with this strategy.
But you can do better. Seek out growth in the
lesser known names in the exploration, refining and drilling
services sectors.
All have their hand on the pulse of the energy
market but the upside possibility is greater than with the slower
growing Big Oil plays.
3 Amazing Energy Stocks to Buy Right Now
1. CVR Energy
2. Stone Energy
3. Complete Production Services
These 3 energy stocks are all cheap, are expected
to see huge earnings growth and have momentum as they're trading
near 52-week highs.
That is the triple threat- a stock with value,
growth and momentum all rolled into one.
1. CVR Energy, Inc. (CVI) is a mid-continent
refiner which also is majority owner of a nitrogen fertilizer
producer it spun off earlier this year.
Forward P/E: 8.7
Expected 2011 EPS Growth: 784%
This Zacks #1 Rank (strong buy) has a ton of
momentum, with shares at 52-week highs, up 76.5% in the last 6
months compared to the S&P 500's return of just 6.2%.
2. Stone Energy (SGY) is a mid-cap oil and
natural gas explorer with interests in the Gulf of Mexico and
Appalachia.
Forward P/E: 9.4
Expected 2011 EPS Growth: 66.4%
This Zacks #2 Rank (buy) has been trading in a more
narrow trading range recently and will tend to move with the price
of crude. Still, shares are new 52-week highs and have returned 50%
in the last 6 months.
3. Complete Production Services (CPX) is a
way to get in on the unconventional oil and gas plays in the shale
regions of North America. This Zacks #1 Rank (strong buy) provides
oilfield services which focus on the completion and production
phases of oil and gas wells.
Forward P/E: 12.8
Expected 2011 EPS Growth: 150.4%
The drilling service companies are hot. Shares have
risen 150% in the last 6 months, well outpacing the S&P 500's
6.2% return.
Buying Opportunity in Energy
Instead of complaining about the price of gas (as I
certainly do!)- you can get in the game by actually becoming an
owner of energy stocks.
These 3 energy stocks are cheap but are expected to
see huge growth in 2011. That's a winning combination.
[The author of this article owns shares of
Exxon.]
Tracey Ryniec is the Value Stock Strategist for
Zacks.com. She is also the Editor of the Turnaround Trader and
Insider Trader services. You can follow her at
twitter.com/traceyryniec.
COMPLETE PRODUC (CPX): Free Stock Analysis Report
CVR ENERGY INC (CVI): Free Stock Analysis Report
STONE ENERGY CP (SGY): Free Stock Analysis Report
Zacks Investment Research
CVR Energy (NYSE:CVI)
Historical Stock Chart
From Sep 2024 to Oct 2024
CVR Energy (NYSE:CVI)
Historical Stock Chart
From Oct 2023 to Oct 2024