Bes Stocks To Buy 2014, Best Stocks For 2014: Good Oil Stocks In 2014

Friday, March 23, 2012

Good Oil Stocks In 2014

Since the middle of July, the business headlines have been relentlessly scary as governments, corporations and individuals scramble to stay afloat in a weak global economy. Yet for airline industry executives, each day brings more good news. Oil prices are falling and look set to fall even more in coming weeks.

Crude oil was above $110 per barrel in late April, but has since fallen to about $84. Now that the crisis in Libya appears to be resolved, it should start boosting output back up to prior levels, right at a time when global oil demand may be trimmed a bit in the face of an economic slowdown. At this point, a move toward $70 oil may be in the cards as these factors play out.

Good Oil Stocks In 2014:El Paso Corporation (EP)

El Paso Corporation operates in the natural gas transmission, and exploration and production sectors of the energy industry primarily in the United States. It offers natural gas transmission services to a range of customers, including natural gas producers, marketers, and end-users, as well as other natural gas transmission, distribution, and electric generation companies through its interests in approximately 43,100 miles of interstate pipeline system. The company also operates approximately 240 billion cubic feet of storage capacity, and an LNG receiving terminal in Elba Island, Georgia. In addition, El Paso Corporation focuses on the exploration, acquisition, development, and production of natural gas, oil, and natural gas liquids in the United States, Brazil, and Egypt, as well as engages in midstream business. The company primarily sells its domestic natural gas and oil to third parties. As of December 31, 2010, it had proved natural gas and oil reserves of approximately 3.4 trillion cubic feet of natural gas equivalents. The company was founded in 1928 and is based in Houston, Texas.

Advisors' Opinion:

By Louis Navellier At 2011-11-17
El Paso Corp. (NYSE:EP) is an energy company that operates in the natural gas transmission and exploration and production sectors of the energy industry. Clearly the turbulent market hasn’t affected El Paso stock — it’s up 40% year to date.
By Chuck At 2011-10-6
El Paso (EP-N17.920.372.11%) is a natural gas transmission, exploration and production company. It receives “buy” ratings from an impressive 80 per cent of analysts.

El Paso has significant interests in the 42,000-mile North American natural gas pipeline system, which will increase in importance in coming years as the U.S. segues from foreign-produced oil to domestically-abundant natural gas. El Paso has grown net income 7.2 per cent a year, on average, since 2007, but cut its dividend from a high of five cents in 2009, hurting its perception with investors. Currently, the company pays one cent a quarter, equaling an annual yield of 0.3 per cent. Analysts don't expect a near-term boost.

Still, El Paso is an attractive investment because it has pricing power over those who need to transport or store natural gas and has ample profit margins. In the third quarter, the gross margin jumped from 54 per cent to 64 per cent and the operating margin rose from 34 per cent to 44 per cent. In addition to its stable pipeline business, El Paso's exploration unit has interest in many of the so-called emerging shale plays in the U.S., including the Haynesville, Eagle Ford and Wolfcamp properties. JPMorgan, which rates El Paso “overweight”, recently cut its 2011 natural gas price forecast to $4.35 per thousand cubic feet from $5.06 and its 12-month target for El Paso to $15.50.

From a longer-term perspective, El Paso is particularly attractive relative to exploration stocks because it has lucrative prospects, coupled with stable transportation cash flow. Also, it remains undervalued relative to peer investments, selling for a trailing earnings multiple of 11, a forward earnings multiple of 13, a book value multiple of 2.2, a sales multiple of 2.1 and a cash flow multiple of 5.4, 43 per cent, 29 per cent, 50 per cent, 32 per cent and 41 per cent industry discounts.

Bullish Scenario: BMO Capital Markets forecasts an advance of 31 per cent to $19.

Bearish Scenario: Goldman Sachs ranks the stock “neutral”, with a $14 target.
By Brian Stoffel At 2011-10-6
El Paso, added to the Rising Star collection by Jordan DiPietro, is a two-headed beast. "El Paso is an exploration and production company second, and a pipeline operator first," he says.

This means that while exploration and production are subject to the vagaries of changing oil prices, the pipelines can act as a steady stream of reliable income.

So far, the company's objective of building out its pipelines has been coming up aces: "[El Paso] has three pipeline projects that are on schedule and expected to come in about 25% under budget. With an $8 billion backlog of pipeline projects coming into fruition in the next few years, the company has multiple opportunities to boost earnings."
By Ken Sweet At 2011-9-1
Shares of El Paso Corp. (EP), owner of the nation's largest natural gas pipeline network, got a boost from increased investor interest in natural gas and stronger-than-expected earnings.

The company recently raised its full-year guidance to between $1and $1.10 a share, citing higher oil and gas prices.

Investors also responded positively to El Paso's decision last month to spin off its natural gas exploration and production division into a separate company, allowing El Paso to focus solely on its pipeline, transportation and distribution businesses.

Good Oil Stocks In 2014:Transocean Inc. (RIG)

Transocean Ltd. provides offshore contract drilling services for oil and gas wells worldwide. It offers deepwater and harsh environment drilling, oil and gas drilling management, and drilling engineering and drilling project management services. The company also offers well and logistics services. In addition, it engages in oil and gas exploration, development, and production activities primarily in the United States offshore Louisiana and Texas, and in the United Kingdom sector of the North Sea. As of February 10, 2011, the company owned, had partial ownership interests in, and operated 138 mobile offshore drilling units, including 47 high-specification floaters, 25 midwater floaters, 9 high-specification jackups, 54 standard jackups, and 3 other rigs, as well as 1 ultra-deepwater floater and 3 high-specification jackups under construction. Transocean Ltd. was founded in 1953 and is based in Zug, Switzerland.

Advisors' Opinion:

By John Paulson At 2011-10-6
Transocean LTD., formerly Transocean Inc., is an international provider of offshore contract drilling services for oil and gas wells. Transocean Ltd. has a market cap of $24.06 billion; its shares were traded at around $75.41 with a P/E ratio of 13.11 and P/S ratio of 2.51. Transocean Ltd. had an annual average earnings growth of 12.7% over the past 10 years. GuruFocus rated Transocean Ltd. the business predictability rank of 2.5-star.

Transocean stock has not quite recovered from the market crash of 2008, when it plunged from a $160 range to the low $40 range. As of April 25, 2011, it is selling at $73.40, with a 52-week high of $90.53. Year to date, it is up 5.6%.

Paulson initiated his stake in the company in the fourth quarter of 2010. He bought 7.2 million shares at an average price of $67.17. The stock has gained 12.3% since then.

Transocean owned the right that exploded in the Gulf of Mexico oil spill in April, 2010. From 2006-2009, the company earned net income of $1 billion to over $5 billion. In 2010, the year of the oil spill, it took a dramatic hit, earning $961 million in net income. In the fourth quarter of 2010, it lost $799 million in net income. Transocean had a gross profit margin of 46.5% in 2010.

In April, Transocean’s ultra-deepwater drillship set the record for deepest water drill in history: 10,194 feet off the coast of India. The company will also pay the first installment of a proposed dividend of approximately $1 billion in June.
By Brian Stoffel At 2011-10-6
Finally, a list of energy stocks wouldn't be complete without a pure-play rig maker. Though the company took some hits for its role in the Deepwater Horizon disaster in 2010, that didn't stop Jim Mueller and Michael Olsen from adding Transocean to their portfolios.

Jim picked the stock back in November 2010 because he thought the market's expectations for the stock were simply messed up. Using a discounted cash flow model, Jim said the stock's price "implies the company can grow [free cash flow] by just 0.7% for each of the next five years, then by 0.4% for the following five years, followed by no more growth forever."

A quick look at history showed him what a silly assumption this was: "Over the past five years, Transocean has grown free cash flow by an average of 41.7% per year."

Shares are 19% cheaper than they were when Jim made his original recommendation, which means expectations must be downright outrageous by now.

Good Oil Stocks In 2014:ENI S.p.A. (E)

Eni SpA, an integrated energy company, engages in the exploration, production, transportation, transformation, and marketing of oil and natural gas. The company also involves in the production and sale of electricity; refining and marketing of petroleum products; and production and sale of petrochemical products and hydrocarbons. In addition, it engages in the offshore and onshore hydrocarbon field construction. Further, the company offers offshore and onshore drilling, and offshore design and engineering services for oil and gas companies. It has a strategic partnership with Gazprom for the joint development of projects in the upstream oil and gas markets. Eni SpA operates in Europe, Africa, Asia and Oceania, and the Americas. The company was founded in 1953 and is headquartered in Rome, Italy with an additional office in San Donato Milanese, Italy.

Good Oil Stocks In 2014:Chevron Corporation (CVX)

Chevron Corporation, through its subsidiaries, engages in petroleum, chemicals, mining, power generation, and energy operations worldwide. It operates in two segments, Upstream and Downstream. The Upstream segment involves in the exploration, development, and production of crude oil and natural gas; processing, liquefaction, transportation, and regasification associated with liquefied natural gas; transportation of crude oil through pipelines; and transportation, storage, and marketing of natural gas, as well as holds interest in a gas-to-liquids project. The Downstream segment engages in the refining of crude oil into petroleum products; marketing of crude oil and refined products primarily under the Chevron, Texaco, and Caltex brand names; transportation of crude oil and refined products by pipeline, marine vessel, motor equipment, and rail car; and manufacture and marketing of commodity petrochemicals, plastics for industrial uses, and fuel and lubricant additives. It also produces and markets coal and molybdenum; and holds interests in 13 power assets with a total operating capacity of approximately 3,100 megawatts, as well as involves in cash management and debt financing activities, insurance operations, real estate activities, energy services, and alternative fuels and technology business. Chevron Corporation has a joint venture agreement with China National Petroleum Corporation. The company was formerly known as ChevronTexaco Corp. and changed its name to Chevron Corporation in May 2005. Chevron Corporation was founded in 1879 and is based in San Ramon, California.

Advisors' Opinion:

By Hawkinvest At 2012-2-23
Chevron Corporation (CVX) is a leading integrated energy company with exposure to oil, natural gas, refining, etc. This could be one of the most undervalued stocks in the market. Chevron pays a dividend that beats many other stock and bond! yields, plus it has a below market price to earnings ratio of about 8 times earnings. The average stock in the S&P 500 Index currently trades for over 12 times earnings. If oil prices continue to rise, the already healthy profit estimates for Chevron might be too low. With oil prices showing strength this early in the season, Chevron could be poised to beat earnings in the coming months. However, the stock is trading at the upper end of the recent trading range. Recently, it has been possible to buy this stock at about $102 per share, so waiting for dips could pay off.

Here are some key points for CVX:

Current share price: $104.25

The 52 week range is $85.63 to $110.01

Earnings estimates for 2012: $12.66 per share

Earnings estimates for 2013: $13.20 per share

Annual dividend: $3.42 per share which yields 3.1%
By Louis Navellier At 2011-11-17
Chevron (NYSE:CVX) provides support to its subsidiaries in the following fields: petroleum operations, chemicals operations, mining operations, power generation and energy services. While many stocks on the NYSE have underperformed in 2011, Chevron stock is up 8% year to date.
By Goodwin At 2011-10-6
Chevron (CVX-N94.663.183.48%) is the world's second-largest energy company, after fellow Dow component Exxon Mobil (XOM-N73.951.121.54%).

But, analysts favour Chevron's stock, which receives positive reviews from 76 per cent of researchers in coverage. In contrast, Exxon receives positive reviews from 42 per cent of analysts, ranking third-worst in the Dow. Chevron is scheduled to report fourth-quarter results on Jan. 28. Its third-quarter adjusted earnings tally of $1.87 (reflecting 8.7 per cent year-over-year growth) missed the consensus forecast of $2.15 by 13 per cent, sending shares down modestly. The sales figure, at $49-billion, missed by 1.9 per cent. Chevron has integrated global operations and sells at a peer discount.

Its stock trades at a trailing earnings multiple of 11, a forward earnings multiple of 8.9, a book value multiple of 1.8, a sales multiple of 1 and a cash flow multiple of 6.2, 43 per cent, 52 per cent, 58 per cent, 67 per cent and 32 per cent discounts to oil-and-gas industry averages. Based on forward earnings, Chevron is the fourth cheapest Dow stock. It also pays a 72-cent quarterly dividend, translating to a 3.1 per cent dividend yield, seventh highest in the Dow. It has boosted the payout 7.9 per cent a year, on average, over a three-year span and 10 per cent a year, on average, over a five-year span. Chevron has $15-billion of cash, compared to $11-billion of debt.

Bullish Scenario: Macquarie expects Chevron's stock to rise 21 per cent to $114 in 12 months.

Bearish Scenario: JPMorgan, despite rating Chevron “overweight”, has a $90 target.
By Chuck Carlson At 2011-10-6
Chevron provides administrative, financial, management and technology support to the United States and international subsidiaries that engage in petroleum operations, chemicals operations, mining operations, power generation and energy services. Cramer holds 500 shares of CVX stocks. CVX has a dividend yield of 3.21% and returned 10.91% since the beginning of this year. It has a market cap of $195.53B and a P/E ratio of 8.52. Phill Gross and Robert Atchinson invested over $300 million in CVX.
By Nelson At 2011-9-10
This major international energy company primarily engages in exploration, refining, transportation and storage of crude oil and natural gas.?Chevron (NYSE:CVX) ran to a high at over $110 before double topping and falling to its major support zone at $95 to $97. That zone is also supported by the 200-day moving average, which adds strength to the zone.?Note that despite heavy selling due to a decline in the price of crude, the stock has not broken down, and the stochastic appears to be beginning to arch up — a preliminary positive. Some energy analysts say that the U.S. government’s recent decision to release reserves from the Strategic Petroleum Reserve (SPR) will have the opposite impact than desired, creating a shortage of crude in the reserve that must be replaced at ultimately higher prices. Insiders have been strong buyers of the stock in the last 3 months.

Buy CVX stock through $95 with a six-month target of $110 and a 12-month target of $125.?S&P has the stock rated as a “Strong Buy 5-Stars.”?The annual dividend is $3.12 providing a yield of 3.15%.
By Jim Cramer,TheStreet At 2011-9-7
I see oil going to $100 a barrel in 2011, given the expansion of the world's economy. Chevron (CVX) is very levered to the price of crude -- much more so than Exxon Mobil (XOM) -- and I see it outperforming its peers.

Nevertheless, those who bought Chevron because of its yield will, of course, be left high and dry, as I think it can go to $110 on the strength of the oil price and a very aggressive plan to produce more oil. Just a great solid stock to own in 2011. Maybe the best management in the industry, too.