- (0:30) - Why Are Energy Stocks So Disliked?
- (6:35) - Whats Going On With Big Oil Stocks?
- (8:00) - Tracey’s Top Picks: E&P Stocks To Watch
- (22:15) - Episode Roundup: XOM, CVX, OXY, APA, MTDR, SM, CNX
Welcome to Episode #146 of the Value Investor Podcast
Every week, Tracey Ryniec, the editor of Zacks Value Investor portfolio, shares some of her top value investing tips and stock picks.
What’s the most hated industry on Wall Street?
It’s not retail, it’s energy.
After selling off in late 2018, the exploration and production (E&P) stocks are taking a beating again in 2019. Some are trading near 52-week lows.
That has created a buying opportunity and the insiders are jumping in.
Are they buying at the bottom or will this be another false bottom since crude prices began to plunge in 2015?
Where Are the Insiders Buying This Time?
1. Exxon Mobil Corp. (XOM - Free Report) shares are actually up 10.5% year-to-date. But while that is still trailing the S&P 500 on the year, which is up 16.7%, the insiders haven’t been buying in 2019. Insider buying has been quiet at all of Big Oil so far this year.
2. Apache Corp. (APA - Free Report) shares have fallen 33% over the last year even though first quarter production in the Permian was at a new record, up 36% year-over-year. Did the insiders see this as a buying opportunity?
3. CNX Resources Corp. (CNX - Free Report) shares have fallen 35.7% year-to-date even though the natural gas E&P has been buying back shares with cash and has reduced share count by 15%. It expects $500 million in free cash flow in 2020. Did the insiders think this was a deal this spring?
4. SM Energy Co. (SM - Free Report) has a market cap of just $1.3 billion but it still pays a dividend, currently yielding 0.9%. It recently raised its second quarter and full year production guidance thanks to better-than-expected well performance. Shares are trading near 52-week lows. Who was buying?
5. Matador Resources Company (MTDR - Free Report) has sunk 32% over the last year but has rebounded 15% year-to-date. In the first quarter, its total oil, natural gas and oil equivalent production were all at record highs. As of May 1, 70% of its oil production was hedged for the remainder of 2019. Do the insiders still think the shares are a value?
The insiders have to hold the stock for at least 6 months after they buy so insider buys are a long-term play, not a short term, on the stock and the company.
And the energy insiders have bought several times before when the shares have weakened, including in 2017 and 2018.
Is this time different?
Tune into this week’s podcast to find out.
[In full disclosure, Tracey owns shares of Apache in her own personal portfolio.]
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