How To Buy Oil Stocks Now
Crude prices could remain muted in the near term due to continued macroeconomic uncertainty and some supply and demand dynamics. However, oil appears poised to rebound later this year. This means now might be the perfect time to buy oil stocks, since many have followed oil prices lower in recent months.
how to buy oil stocks now
Oil prices have fallen from their peak, largely due to macroeconomic worries. While that weight could remain on oil prices in the near term, crude appears poised to bounce back sharply later this year as demand begins to outstrip supplies in the second half. This means now might be the perfect time to buy oil stocks before the rebound.
While it's far too soon to bail out on the energy trade (opens in new tab), it's probably fair to say that the easiest of money has already been made. With that in mind, it seemed like a good time to see which S&P 500 exploration and production oil stocks get the highest recommendations from industry analysts.
Below please find Wall Street's three highest rated oil stocks to buy now. (Stocks are listed in reverse order of analysts' consensus recommendations, from lowest to highest conviction. Ratings and market data are as of Nov. 28.)
Of 30 analysts issuing opinions on FANG, 15 rate it at Strong Buy, 11 say Buy, two call it a Hold and two say sell. That sort of conviction solidifies Diamondback Energy's status as one of the best oil stocks to buy now.
And, like many of the best oil stocks to buy now, COP shares still look relatively cheap. Uncertainty regarding the future course of oil prices has COP stock changing hands at just 9.2 times analysts' 2023 earnings per share (EPS) estimate. That's quite a bargain when compared against the stock's five-year average of 21.2 times projected EPS, per Refinitiv Stock Report Plus.
Given the history of oil supply disruptions caused by political events, market participants constantly assess the possibility of future disruptions. In addition to the size and duration of a potential disruption, market participants also consider the availability of crude oil stocks and the ability of other producers to offset a potential supply loss. When spare capacity and inventories are low, a potential supply disruption may have a greater impact on prices than might be expected if only current demand and supply were considered.
David Rosenberg, founder of independent research firm Rosenberg Research & Associates Inc, has outlined 5 key reasons why energy stocks remain a buy despite oil prices failing to make any major gains over the past couple of months.
Energy stocks remain cheap despite the huge runup. Not only has the sector widely outperformed the market, but companies within this sector remain relatively cheap, undervalued, and come with above-average projected earnings growth.
Rosenberg has analyzed PE ratios by energy stocks by looking at historical data since 1990 and found that, on average, the sector ranks in just its 27th percentile historically. In contrast, the S&P 500 sits in its 71st percentile despite the deep selloff that happened earlier in the year.
Some of the cheapest oil and gas stocks right now include Ovintiv Inc. (NYSE: OVV) with a PE ratio of 6.09; Civitas Resources, Inc. (NYSE: CIVI) with a PE ratio of 4.87, Enerplus Corporation (NYSE: ERF)(TSX: ERF) has PE ratio of 5.80, Occidental Petroleum Corporation (NYSE: OXY) has a PE ratio of 7.09 while Canadian Natural Resources Limited (NYSE: CNQ) has a PE ratio of 6.79.if(window.innerWidth
ASX 200 oil stocks are being hit with two related but separate concerns that have sent the Brent crude oil price to its lowest level since late 2021. Brent is currently trading for US$73.95 per barrel.
SVB Financial provides credit and banking services to The Motley Fool. Motley Fool contributor Bernd Struben has no position in any of the stocks mentioned. The Motley Fool Australia's parent company Motley Fool Holdings Inc. has positions in and has recommended SVB Financial. The Motley Fool Australia has recommended SVB Financial. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.
Following an agreement on 1 April by IEA member countries for a new emergency release of oil stocks, the IEA Governing Board confirmed today that the total amount committed to date stands at 120 million barrels, making it the largest stock release in IEA history.
Emergency oil stocks in IEA member countries are either in the form of public stocks (government-owned or by specialised agencies), or stocks held by industry under an obligation of the government. In the case of public stocks, these can be released via tenders or loans to the market, which will be launched and released over the coming weeks and months, depending on the specific stockholding system and market needs in each country. In the case of obligated industry stocks, obligations will be lowered, via legislative decrees or administrative mandates, to make the volumes available for consumption.
The following table shows the breakdown of the oil to be made available by each of the participating countries. More details will be made available in due course on the breakdown of the pledged barrels in crude and products, and public and obligated industry stocks.
Oil stocks are the biggest winners in the S&P 500, enjoying a rise of over 100% so far in 2022, according to data from online trading platform CMC Markets. If the upward trend continues, investors looking to take advantage of the S&P 500 best performers could do well from crude oil stocks.
The best-performing stocks in the S&P 500 as of August 2022 were all oil stocks. Occidental Petroleum (NYSE: OXY) topped the chart, with a 126.8% share price gain in the 12 months to August.
There has been a lot of recent commentary about the disconnect between oil prices and energy stocks, and for good reason. West Texas Intermediate (WTI) is now down 34 per cent from its 52-week high whereas the energy sector is within four per cent of its high.
What this has meant is that even with the increase in the share prices of energy names, the boost to earnings estimates has been even larger. From our standpoint, this indicates the rally in energy stocks has been entirely supported by improved fundamentals, as opposed to lower-quality rallies that are driven by speculation.
We believe this is yet another reason investors feel more comfortable holding energy names, since there is a level of visibility on prices that was sorely missing previously. Prices around US$90 per barrel would ensure that energy stocks are able to sustain strong payouts via dividends and buybacks.
Furthermore, the oil stocks were at 695.1 million barrels for the week ending Jan. 20, 2017, which was the same day that Trump was sworn in as president. The supply declined almost weekly from that point on, until the reserve had about 638.1 million barrels on hand as of the week ending Jan. 15, 2021. That was five days before Biden was inaugurated.
Reserve oil stocks have continued to decline under Biden. As of the week ending March 25, the SPR had about 568.3 million barrels of crude available. The Energy Information Administration says that reserve oil stocks have been declining in recent years due to legislation authorizing drawdowns.
For our discussion, we are going to be using XLE, the Energy Select SPDR ETF, as the proxy for oil stocks. The top two holdings of XLE are the major oil companies ExxonMobil (XOM) and Chevron (CVX). Together these two comprise over 42% of the weighting for the ETF.
The yearly chart below of oil stocks (XLE) versus the S&P 500 (SPY) shows just how great the outperformance of XLE has gotten to stocks overall. The XLE shows a robust gain of just over 60% in the past 12 months compared to a nearly 17.5% loss for the SPY.
Interesting to note that the last time oil stocks hit such heights back in early June led to a significant drop, or mean reversion, in XLE. Look for a similar scenario to unfold with XLE being a relative underperformer to SPY over the coming months.
That certainly was the case for the first half of the year, as seen in the chart below. Both oil and oil stocks made highs in early June as West Texas Intermediate Crude prices ($WTIC) traded well over $120 barrel.
Traders and investors looking to position to profit from the anticipated convergence in XLE to lower levels can buy puts and put spreads on oil stocks or sell out-of-the money bear call spreads. We have done just that recently with a put diagonal on ExxonMobil (XOM).
Gold prices fell, snapping three days of gains, as European stocks rallied and the dollar strengthened ahead of key US economic data. Crude oil futures fell as the World Bank cut its global economic growth forecast, ending a two-day rally triggered by a sharp US inventory drawdown.Gold snaps 3-day rally, crude oil prices fall
Asian stocks opened lower on Thursday, tracking overnight losses in US stocks. The mood was largely negative after the US Federal Reserve officials projected hikes in interest rates by 2023. MSCI's broadest index of Asia-Pacific shares outside Japan was down by 0.68 per cent.
Asian stocks opened lower in subdued trade after a mixed close on Wall Street, with an increasing threat of delta variant and eyes shifting to key US economic indicators due later this week. MSCI's broadest index of Asia-Pacific shares outside Japan was down by 0.20 per cent.
IFAs are generally not stock-pickers and will not advise you on particular stocks or shares. They will, however, help you understand how much risk you can afford to take, and therefore how much of your money you can reasonably speculate on the oil markets.
Energy stocks in the S&P 500 are up 39% in 2022, according to data from S&P Dow Jones Indices. Gas companies Exxon Mobil and Chevron are up 42% and 29% for the year, respectively. Marathon Oil's stock price has risen around 50%, and Occidental Petroleum is up 82%. 041b061a72