Oil is trading above $50 per barrel, and that is great news for stocks exposed to the supply end of the commodity. Many believe that the current price of crude oil is sustainable. Investors are even buying call options on oil, betting that the commodity can climb to over $100 by 2020.
Before the price recovery of crude, oil stocks had been getting hammered due to an over-abundant supply of the slippery commodity. However, OPEC now forecasts oil demand to exceed its production in 2016. This hasn’t happened in 3 years, according to past OPEC reports.
As the sentiment on oil has changed, high quality Buy-ranked stocks have been building momentum over the last three months. Some of these companies seem poised to see their share prices rally even further, as they have a Momentum grade of “A” in our Style Scores. Below, we outline three such stocks which stand to benefit due to their exposure to oil.
Rose Rock Midstream, LP-
Rose Rock owns, operates, acquires, and develops a diversified portfolio of midstream energy assets. It should be noted that the midstream sector of the oil market focuses on transporting, storing, and marketing the commodity. Oil demand is expected to rise, and midstream oil market peers such as Rose Rock stand to win big.
RRMS stock is a Zacks Rank #1 (Strong Buy), and its shares have gained 22% in the last month. Over the last 3 months, the stock has picked up a massive 120% in market value. It’s worth noting that the company doles out a very generous 10.49% dividend.
McDermott International-
McDermott International is one of the leading energy services companies of the world. It offers integrated engineering, procurement, module fabrication, and other services for upstream field developments worldwide. MDR stock is a Zacks Rank #2 (Buy), and its shares have popped up by 5.68% over the last month. In the last 3 months, McDermott’s share price has grown by over 14%.
McDermott is looking great on a momentum basis, but it also looks like a bargain across some key financial metrics. MDR stock is trading at a price-to-book of just 0.75. When a company’s price-to-book is under one, it may be undervalued. McDermott is not too leveraged either, as it has a debt-to-equity of 0.52. McDermott International has done well to beat our EPS consensus estimate in each of the last four quarters. Over that time span, the company has beaten our earnings estimate by an average of 506% per quarter.
North Atlantic Drilling Ltd-
North Atlantic Drilling focuses on providing harsh environment offshore drilling services to the oil and gas industry. It should be noted that the company primarily operates in Norway and the UK. NADL is a Zacks Rank #1 (Strong Buy). The company’s shares have gained 98.07% in the last month alone. Today, shares are up 4%.
The company gets a score of “A” for value in our Style Scores. This is warranted, as the company trades at a price-to-book of just 0.30. It is possible that this company is undervalued. It is quite leveraged, but the turnaround for crude makes the share price upside for this company pretty high.
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3 Buy-Ranked Oil Stocks Building Momentum Over the Last 3 Months
Oil is trading above $50 per barrel, and that is great news for stocks exposed to the supply end of the commodity. Many believe that the current price of crude oil is sustainable. Investors are even buying call options on oil, betting that the commodity can climb to over $100 by 2020.
Before the price recovery of crude, oil stocks had been getting hammered due to an over-abundant supply of the slippery commodity. However, OPEC now forecasts oil demand to exceed its production in 2016. This hasn’t happened in 3 years, according to past OPEC reports.
As the sentiment on oil has changed, high quality Buy-ranked stocks have been building momentum over the last three months. Some of these companies seem poised to see their share prices rally even further, as they have a Momentum grade of “A” in our Style Scores. Below, we outline three such stocks which stand to benefit due to their exposure to oil.
Rose Rock Midstream, LP-
Rose Rock owns, operates, acquires, and develops a diversified portfolio of midstream energy assets. It should be noted that the midstream sector of the oil market focuses on transporting, storing, and marketing the commodity. Oil demand is expected to rise, and midstream oil market peers such as Rose Rock stand to win big.
RRMS stock is a Zacks Rank #1 (Strong Buy), and its shares have gained 22% in the last month. Over the last 3 months, the stock has picked up a massive 120% in market value. It’s worth noting that the company doles out a very generous 10.49% dividend.
ROSE ROCK MIDST Net Income (Quarterly)
ROSE ROCK MIDST Net Income (Quarterly) | ROSE ROCK MIDST Quote
McDermott International-
McDermott International is one of the leading energy services companies of the world. It offers integrated engineering, procurement, module fabrication, and other services for upstream field developments worldwide. MDR stock is a Zacks Rank #2 (Buy), and its shares have popped up by 5.68% over the last month. In the last 3 months, McDermott’s share price has grown by over 14%.
McDermott is looking great on a momentum basis, but it also looks like a bargain across some key financial metrics. MDR stock is trading at a price-to-book of just 0.75. When a company’s price-to-book is under one, it may be undervalued. McDermott is not too leveraged either, as it has a debt-to-equity of 0.52. McDermott International has done well to beat our EPS consensus estimate in each of the last four quarters. Over that time span, the company has beaten our earnings estimate by an average of 506% per quarter.
MCDERMOTT INTL Free Cash Flow (Quarterly)
MCDERMOTT INTL Free Cash Flow (Quarterly) | MCDERMOTT INTL Quote
North Atlantic Drilling Ltd-
North Atlantic Drilling focuses on providing harsh environment offshore drilling services to the oil and gas industry. It should be noted that the company primarily operates in Norway and the UK. NADL is a Zacks Rank #1 (Strong Buy). The company’s shares have gained 98.07% in the last month alone. Today, shares are up 4%.
The company gets a score of “A” for value in our Style Scores. This is warranted, as the company trades at a price-to-book of just 0.30. It is possible that this company is undervalued. It is quite leveraged, but the turnaround for crude makes the share price upside for this company pretty high.
NORTH ATL DRILG Market Cap
NORTH ATL DRILG Market Cap | NORTH ATL DRILG Quote
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