The energy sector is constantly changing. We know that there is a
high dependence on oil and I like to say that oil is the fuel for
the worlds economy. With oil prices rebounding amid talk of an
OPEC production cut investors are looking at the sector for some
At Zacks Investment Research, I manage the Game Changers portfolio
where I look for stocks that are positioned to benefit from large
shifts in demand. It might be tech, it might be consumer staples
and it might be energy. Right now, I hold two stocks in the energy
space in the portfolio, but I want to review other potential
additions as well.
Trusting the Rank
At Zacks, we focus most of our energy on earnings, and more
specifically stocks that show positive earnings estimate revisions.
The Zacks Rank is an algorithm that tells me which stocks are
seeing the best earnings estimate revisions, and I use it on a
daily basis to screen for stocks.
Helix Energy Solutions (HLX - Free Report) is a Zacks Rank #1
(Strong Buy) stock that has seen a great run over the last several
weeks as it moved from $7 to more than $10 per share today. Last
night the company presented a slide in a presentation that wasnt
especially positive, but the market doesnt seem to mind. The
company see FY16 revenues of $505M, down slightly from $510M that
was the previously guided number. The reason the stock is up is
that the Wall Street consensus was calling for $500M in revenue, so
it is a slight uptick.
The company just posted earnings $0.10 when the Zacks Consensus
Estimate was calling for a $0.04. That $0.06 beat is a 150%
positive earnings surprise and just what I like to see in a
candidate for my Game Changers portfolio.
Gushing Over Another Stock
Baker Hughes (BHI) is a Zacks Rank #2 (Buy) and is
slated to report earnings soon. The company is on a bit of a skid,
as it has missed the Zacks Consensus Estimate in each of the last
I see the Zacks Consensus calling for revenue of $2.427B in revenue
and a loss of $0.44 per share.
BHI isnt really changing the game for me right now, but we will
learn more about this stock following the earnings report which is
expected out early next week.
Another Oil Name
Halliburton (HAL - Free Report) is also a Zacks Rank #2 (Buy)
and coming off a solid earnings report. The company reported
earnings of $0.01 when the Zacks Consensus Estimate was looking for
a loss of $0.07. The $0.08 beat translates into a positive
earnings surprise of 114%, and that is music to my ears.
Earnings estimates for next year are a little stagnant as they have
not move moved that much over the last five months. In that time
period, the number was as high as $0.90 and as low as $0.88 and is
That said, the $0.89 looks great compared to a loss of $0.16, which
is the current Zacks Consensus Estimate for FY16.
Not Oil, But Close
Energy Recovery (ERII - Free Report) was the Bull of the Day a few weeks ago and I
strongly encourage you to check that article out. I go into the
recent earnings history, estimate changes and valuation as well in
that write up. ERII is not really oil, but they are involved in
the industrial fluid flow markets.
ERII does a lot of work in the desalinization industry but is also
a player in the oil and gas industry. Remember there is a large
part of the eco-system of oil that is industrial products and
services to help keep the worlds engine all greased up!
ERII is the exact type of stock that I look for in Game Changers.
Low Price, Big Potential
The other service I manage at Zacks is Stocks Under $10. This
looks to leverage the Zacks Rank and stocks that are priced under
$10. Right now, I only have 12 stocks in that portfolio and I am
looking to expand it to the normal level of 15 names in the near
One potential addition is Precision Drill (PDS - Free Report) as
it is a Zacks Rank #2 (Buy) and of course, priced below $10. The
company is expected to report earnings tomorrow before the open so
I will be watching it closely.
Confidential from Zacks
This week, Zacks researchers have named 7 other stocks that look to
break out even sooner than today's Bull of the Day. You can see
these time-sensitive tickers free, and access additional trades
that are not available to the public. Simply click here>>.
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Brian Bolan is a Stock Strategist
Stocks Under $10 Investor service where he looks for low
that are seeing positive earnings estimate revisions. This
service has seen some
strong early returns and offers a free trial via the Zacks
Brian also runs the brand new Zacks Game
he looks for stocks that are disrupting their industries and
reaping big gains.