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5 Oil Stocks that Outperformed the Commodity in May
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Oil prices collapsed on Wednesday to their lowest since May 12, on concerns that the stubborn global crude glut won't be reduced by OPEC's extended production cut scheme and the American summer driving season. The price drop extends a downbeat tone in crude trade into June following a third straight monthly loss by the futures contracts.
July West Texas Intermediate crude fell $1.34, or 2.7%, to settle at $48.32 a barrel on the New York Mercantile Exchange. WTI prices lost about 2.1% in May.
3 Reasons for Oil's Mayhem
At the crux of the matter is the rising flood of U.S. shale-driven production. Now at a financial equilibrium, the shale firms are putting more rigs and employees back to work. Throughout the downturn, producers worked tirelessly to cut costs down to a bare minimum and look for innovative ways to churn out more oil from rock. And they managed to do just that by improving drilling techniques.
With these efforts, many upstream companies have repositioned themselves to adapt to the new $50 oil reality and even thrive at those prices. In other words, while OPEC's moves to trim output and rebalance the demand-supply situation has stabilized the market to a large extent, in the process it has incentivized shale drillers to churn out more. As per EIA's latest inventory release, U.S. production rose to 9.32 million barrels a day - 6.3% higher than year-earlier levels.
The extension of supply curbs by top producers led by OPEC also disappointed markets. At a meeting in Vienna last Thursday, the cartel (plus non-members led by Russia) decided to roll over their output cuts of 1.8 million barrels per day (bpd) to reduce global oil inventories until Mar 2018. The move, though widely expected, spooked some oil market investors who hoped that the cuts would be deepened/lengthened further.
Meanwhile, the producer cartel pumped more oil last month than in Apr – the first monthly rise in 2017 – on increasing output from Nigeria and Libya, which are exempt from the deal. The production boost offset improved compliance by other members.
A Handful of Companies Defied the Downturn
Even amid the volatile, declining market, some companies have stood firm, indicating investors’ confidence in them. If bought now, these stocks are likely to outperform others and create long-term wealth. However, selecting stocks to buy could be a tricky proposition, especially with oil prices moving like a roller-coaster. One should focus on picking up stocks that have a sound business, good management and is not pricey.
With a wide range of energy firms thronging the investment space, it is by no means an easy task for investors to arrive at stocks that have the potential to deliver attractive returns. While it is impossible to be sure about such outperformers, this is where the Zacks Rank, which justifies a company’s strong fundamentals, can come in really handy.
Finally, the chosen ones have VGM Score less than or equal to B. Here V stands for Value, G for Growth and M for Momentum and the score is a weighted combination of these three scores. Such a score allows you to eliminate the negative aspects of stocks and select winners. However, it is important to keep in mind that each Style Score will carry a different weight while arriving at a VGM score. Our research shows that stocks with a VGM Score of ‘A’ or ‘B’ when combined with a Zacks Rank #1 or #2 offer the best upside potential.
5 Choices
OMV AG (OMVJF - Free Report) : OMV is an Austria-based integrated oil company with operations in Upstream, Downstream, Chemicals and Gas & Power.
Zacks Rank: #1
Price gain over the last 4 weeks = 13.69%
VGM Score: ‘A’
Enerplus Corp. (ERF - Free Report) : Calgary, Canada-based Enerplus is an independent oil and gas production company with resources across Western Canada and the U.S.
Zacks Rank: #2
Price gain over the last 4 weeks = 13.52%
VGM Score: ‘A’
W&T Offshore Inc. (WTI - Free Report) : An exploration and production company headquartered in Houston, TX, W&T Offshore focuses primarily in U.S. Gulf of Mexico’s shallow water shelf.
Zacks Rank: #2
Price gain over the last 4 weeks = 7.37%
VGM Score: ‘A’
C&J Energy Services Inc. : Houston, TX-based C&J Energy Services offers services related to completion and production to the energy industry in North America.
Zacks Rank: #2
Price gain over the last 4 weeks = 11.02%
VGM Score: ‘B’
Repsol S.A. - ADR (REPYY - Free Report) : Repsol is Spain’s largest energy company, which is engaged in oil and gas exploration and production, refining and marketing of petroleum products, and other energy-related businesses.
Zacks Rank: #2
Price gain over the last 4 weeks = 5.49%
VGM Score: ‘A’
Will You Make a Fortune on the Shift to Electric Cars?
Here's another stock idea to consider. Much like petroleum 150 years ago, lithium power may soon shake the world, creating millionaires and reshaping geo-politics. Soon electric vehicles (EVs) may be cheaper than gas guzzlers. Some are already reaching 265 miles on a single charge.
With battery prices plummeting and charging stations set to multiply, one company stands out as the #1 stock to buy according to Zacks research.
Image: Bigstock
5 Oil Stocks that Outperformed the Commodity in May
Oil prices collapsed on Wednesday to their lowest since May 12, on concerns that the stubborn global crude glut won't be reduced by OPEC's extended production cut scheme and the American summer driving season. The price drop extends a downbeat tone in crude trade into June following a third straight monthly loss by the futures contracts.
July West Texas Intermediate crude fell $1.34, or 2.7%, to settle at $48.32 a barrel on the New York Mercantile Exchange. WTI prices lost about 2.1% in May.
3 Reasons for Oil's Mayhem
At the crux of the matter is the rising flood of U.S. shale-driven production. Now at a financial equilibrium, the shale firms are putting more rigs and employees back to work. Throughout the downturn, producers worked tirelessly to cut costs down to a bare minimum and look for innovative ways to churn out more oil from rock. And they managed to do just that by improving drilling techniques.
With these efforts, many upstream companies have repositioned themselves to adapt to the new $50 oil reality and even thrive at those prices. In other words, while OPEC's moves to trim output and rebalance the demand-supply situation has stabilized the market to a large extent, in the process it has incentivized shale drillers to churn out more. As per EIA's latest inventory release, U.S. production rose to 9.32 million barrels a day - 6.3% higher than year-earlier levels.
The extension of supply curbs by top producers led by OPEC also disappointed markets. At a meeting in Vienna last Thursday, the cartel (plus non-members led by Russia) decided to roll over their output cuts of 1.8 million barrels per day (bpd) to reduce global oil inventories until Mar 2018. The move, though widely expected, spooked some oil market investors who hoped that the cuts would be deepened/lengthened further.
Meanwhile, the producer cartel pumped more oil last month than in Apr – the first monthly rise in 2017 – on increasing output from Nigeria and Libya, which are exempt from the deal. The production boost offset improved compliance by other members.
A Handful of Companies Defied the Downturn
Even amid the volatile, declining market, some companies have stood firm, indicating investors’ confidence in them. If bought now, these stocks are likely to outperform others and create long-term wealth. However, selecting stocks to buy could be a tricky proposition, especially with oil prices moving like a roller-coaster. One should focus on picking up stocks that have a sound business, good management and is not pricey.
With a wide range of energy firms thronging the investment space, it is by no means an easy task for investors to arrive at stocks that have the potential to deliver attractive returns. While it is impossible to be sure about such outperformers, this is where the Zacks Rank, which justifies a company’s strong fundamentals, can come in really handy.
In particular, we have shortlisted 5 companies that have outperformed oil prices over the past 4 weeks, and have a Zacks Rank of #1 (Strong Buy) or #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Finally, the chosen ones have VGM Score less than or equal to B. Here V stands for Value, G for Growth and M for Momentum and the score is a weighted combination of these three scores. Such a score allows you to eliminate the negative aspects of stocks and select winners. However, it is important to keep in mind that each Style Score will carry a different weight while arriving at a VGM score. Our research shows that stocks with a VGM Score of ‘A’ or ‘B’ when combined with a Zacks Rank #1 or #2 offer the best upside potential.
5 Choices
OMV AG (OMVJF - Free Report) : OMV is an Austria-based integrated oil company with operations in Upstream, Downstream, Chemicals and Gas & Power.
Zacks Rank: #1
Price gain over the last 4 weeks = 13.69%
VGM Score: ‘A’
Enerplus Corp. (ERF - Free Report) : Calgary, Canada-based Enerplus is an independent oil and gas production company with resources across Western Canada and the U.S.
Zacks Rank: #2
Price gain over the last 4 weeks = 13.52%
VGM Score: ‘A’
W&T Offshore Inc. (WTI - Free Report) : An exploration and production company headquartered in Houston, TX, W&T Offshore focuses primarily in U.S. Gulf of Mexico’s shallow water shelf.
Zacks Rank: #2
Price gain over the last 4 weeks = 7.37%
VGM Score: ‘A’
C&J Energy Services Inc. : Houston, TX-based C&J Energy Services offers services related to completion and production to the energy industry in North America.
Zacks Rank: #2
Price gain over the last 4 weeks = 11.02%
VGM Score: ‘B’
Repsol S.A. - ADR (REPYY - Free Report) : Repsol is Spain’s largest energy company, which is engaged in oil and gas exploration and production, refining and marketing of petroleum products, and other energy-related businesses.
Zacks Rank: #2
Price gain over the last 4 weeks = 5.49%
VGM Score: ‘A’
Will You Make a Fortune on the Shift to Electric Cars?
Here's another stock idea to consider. Much like petroleum 150 years ago, lithium power may soon shake the world, creating millionaires and reshaping geo-politics. Soon electric vehicles (EVs) may be cheaper than gas guzzlers. Some are already reaching 265 miles on a single charge.
With battery prices plummeting and charging stations set to multiply, one company stands out as the #1 stock to buy according to Zacks research.
It's not the one you think.
See This Ticker Free >>