Back to top

The Zacks Analyst Blog Highlights: Royal Dutch Shell, China Petroleum and Chemical, NGL Energy Partners, Ultra Petroleum and PBF Logistics

Read MoreHide Full Article

For Immediate Release

Chicago, IL – September 29, 2016 – announces the list of stocks featured in the Analyst Blog. Every day the Zacks Equity Research analysts discuss the latest news and events impacting stocks and the financial markets. Stocks recently featured in the blog include Royal Dutch Shell plc (NYSE: (RDS.A - Free Report) -Free Report ), China Petroleum and Chemical Corp. (NYSE: (SNP - Free Report) -Free Report ), NGL Energy Partners L.P. (NYSE: (NGL - Free Report) -Free Report ), Ultra Petroleum Corp. (OTCMKTS: -Free Report ) and PBF Logistics L.P. (NYSE: (PBFX - Free Report) -Free Report ).

Today, Zacks is promoting its ''Buy'' stock recommendations. Get #1Stock of the Day pick for free.

Here are highlights from Wednesday’s Analyst Blog:

Forget Shell: Buy These Stocks Instead

On Sep 28 Zacks Investment Research downgraded Royal Dutch Shell plc (NYSE: (RDS.A - Free Report) -Free Report ) – Europe’s largest energy producer – to a Zacks Rank #5 (Strong Sell), placing it in the bottom 5% of all stocks that Zacks ranks.

Why the Downgrade?

The commodity price rout has brutalized Shell’s revenues and earnings. What’s more, the outlook remains grim, with fundamentals suggesting that the odds are firmly stacked against a sustained crude rally. That’s the reason we are predicting a 47% drop in Shell’s EPS this year.

Moreover, Royal Dutch Shell is the most gas-focused among the major companies in the sector, with more than half of its current production from the commodity. Given natural gas’ price struggles – still struggling to breach the psychologically important $3 threshold consistently – this remains a key area of concern, in our view. In fact, the drop in natural gas prices has forced the group to delay final decision on a $40 billion LNG project in Canada.

We also remain worried about the company’s rise in net debt and reduction of liquidity following Shell's $50 billion mega acquisition of BG Group plc. As it is, the combined group's (Shell + BG) capital expenditure is expected to be around $29 billion in 2016, still quite high by industry standards. This is likely to place a substantial burden on the group’s leverage and credit metrics – especially with the challenging external environment.

Finally, lost reserves/production from the group's asset sales in Nigeria and heightened risk related to the company’s remaining operations in the country cannot be ignored either.

Alternative Bets in the Energy Space

While Royal Dutch Shell is struggling, several other stocks in the energy space are in much better positions at present. We highlight the following stocks, which being armed with favorable Zacks Rank #1 (Strong Buy) or #2 (Buy), are better options for investment amid the prevailing operating backdrop. 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.

Here are the stocks:

China Petroleum and Chemical Corp. (NYSE: (SNP - Free Report) -Free Report ) or Sinopec: With its head office in Beijing, Sinopec is one of the largest petroleum and petrochemical companies in Asia.

Sinopec has a Zacks Rank #1 and a VGM Score of B. It has a P/E (F1) of 18.11, which is lower than the industry average of 37.00. Its earnings estimate for the current year has improved by 16% over the last 60 days.

NGL Energy Partners L.P. (NYSE: (NGL - Free Report) -Free Report ) : It is a limited partnership operating a vertically integrated propane business with three operating segments: retail propane; wholesale supply and marketing; and midstream.

NGL Energy Partners has a Zacks Rank #1, VGM Score of B and surprised earnings to the upside in each of the last two quarters.

Ultra Petroleum Corp. (OTCMKTS: -Free Report ) : Houston, Texas-based Ultra Petroleum is an independent energy firm engaged in the acquisition, development, exploration and production of oil and gas properties. The company’s operations are focused on the Green River Basin of southwest Wyoming, mainly covering the Pinedale and the Jonah fields.

Ultra Petroleum has a VGM Score of A. Fiscal 2016 Zacks Consensus Estimate for this Zacks Rank #2 company is 77 cents, representing 148% earnings per share growth over fiscal 2015. The next year’s average forecast is $2.53, pointing to 229% growth.

PBF Logistics L.P. (NYSE: (PBFX - Free Report) -Free Report ) : Parsippany, NJ-based PBF Logistics operates refined petroleum products storage and transporting facilities.

The partnership has a Zacks Rank #2 and a VGM Score of A. PBF Logistics has an excellent earnings surprise history. It surpassed/met estimates in each of the last four quarters at an average rate of 18.71%.

Now See Our Private Investment Ideas

While the above ideas are being shared with the public, other trades are hidden from everyone but selected members. Would you like to peek behind the curtain and view them? Starting today, for the next month, you can follow all Zacks' private buys and sells in real time from value to momentum . . . from stocks under $10 to ETF and option moves . . . from insider trades to companies that are about to report positive earnings surprises (we've called them with 80%+ accuracy). You can even look inside portfolios so exclusive that they are normally closed to new investors. Click here for Zacks' secret trades >>

Today, Zacks is promoting its ''Buy'' stock recommendations. Get #1Stock of the Day pick for free.

About Zacks Equity Research

Zacks Equity Research provides the best of quantitative and qualitative analysis to help investors know what stocks to buy and which to sell for the long-term.

Continuous coverage is provided for a universe of 1,150 publicly traded stocks. Our analysts are organized by industry which gives them keen insights to developments that affect company profits and stock performance. Recommendations and target prices are six-month time horizons.

Zacks "Profit from the Pros" e-mail newsletter provides highlights of the latest analysis from Zacks Equity Research. Subscribe to this free newsletter today.

About Zacks is a property of Zacks Investment Research, Inc., which was formed in 1978. The later formation of the Zacks Rank, a proprietary stock picking system; continues to outperform the market by nearly a 3 to 1 margin. The best way to unlock the profitable stock recommendations and market insights of Zacks Investment Research is through our free daily email newsletter; Profit from the Pros. In short, it's your steady flow of Profitable ideas GUARANTEED to be worth your time! Register for your free subscription to Profit from the Pros.

Get the full Report on RDS.A - FREE

Get the full Report on SNP - FREE

Get the full Report on NGL - FREE

Get the full Report on UPLMQ - FREE

Get the full Report on PBFX - FREE

Follow us on Twitter:

Join us on Facebook:

Zacks Investment Research is under common control with affiliated entities (including a broker-dealer and an investment adviser), which may engage in transactions involving the foregoing securities for the clients of such affiliates.

Media Contact
Zacks Investment Research

800-767-3771 ext. 9339

Past performance is no guarantee of future results. Inherent in any investment is the potential for loss. This material is being provided for informational purposes only and nothing herein constitutes investment, legal, accounting or tax advice, or a recommendation to buy, sell or hold a security. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. It should not be assumed that any investments in securities, companies, sectors or markets identified and described were or will be profitable. All information is current as of the date of herein and is subject to change without notice. Any views or opinions expressed may not reflect those of the firm as a whole. Zacks Investment Research does not engage in investment banking, market making or asset management activities of any securities. These returns are from hypothetical portfolios consisting of stocks with Zacks Rank = 1 that were rebalanced monthly with zero transaction costs. These are not the returns of actual portfolios of stocks. The S&P 500 is an unmanaged index. Visit for information about the performance numbers displayed in this press release.

More from Zacks Press Releases

You May Like