Can 5 Oil Stocks Soothe Pump Price Panic?

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 |  Includes: BP, CVE, PTR, SNP, STO
by: Fredrik Arnold

A way to get relief from high prices at the pump is to make more money. A poetic way to do so could be to buy high dividend paying oil stocks whose prices are predicted to jump.

Results from ycharts.com tallied as of market closing prices July 26 compared 5 integrated oil and gas industry stocks' prices with analyst mean target price results one year hence. Cenovus Energy (NYSE:CVE), a Canadian firm, exhibited a 36.9 % price upside to lead the field.

The chart above used the one year mean target price set by brokerage analysts matched against July 26 closing price to compare 5 integrated oil and gas stocks showing the highest upside price potential into 2014. No U.S. based firms made the list. Others on the list beside Canada's Cenovus were China Petroleum & Chemical (NYSE:SNP) with 31.5%, and PetroChina (NYSE:PTR) showing 27.6% upside; Statoil ASA (NYSE:STO) from Norway showed 18.31%; BP plc (NYSE:BP) based in the United Kingdom showed a 15.3% price upside.

The number of analysts providing price estimates was noted after the name for each stock. Three to nine analysts were considered optimal for a valid mean target price estimate.

Wall Street Wizards Wager 13.5% Average Net Gain from 5 Oil Dogs By 2014

Five YChart picks were graphed below to show relative strengths by dividend and price as of July 26, 2013 and those projected by Yahoo Finance analyst mean 1 year target estimates to the same date in 2014.

A hypothetical $1000 investment in each stock was divided by the current share price to find the number of shares purchased. The shares number was then multiplied by projected annual per share dividend amounts to find the dividend return. Thereafter the analyst mean target price was used to gauge the stock price upsides and net gains including dividends less broker fees as of 2014.

Historic prices and actual dividends paid from $1000 invested in the five stocks and the aggregate single share prices of those stocks created data points for 2013. Projections based on estimated dividend amounts from $1000 invested in each of the five highest yielding stocks and aggregate one year analyst target share prices from Yahoo Finance created the 2014 data points. The green line showed price and blue showed dividend.

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YCharts projected a 19% lower dividend from $10K invested in this group while aggregate single share price was projected to increase over 25% in the coming year. The number of analysts contributing to the mean target price estimate for each stock was noted in the next to the last column on the chart. Three to nine analysts was considered optimal for a valid projection estimate.

A beta (risk) ranking for each analyst rated stock was provided in the far right column on the chart above. A beta of 1 meant the stock's price would move with the market. Less than 1 showed lower than market movement. Higher than 1 showed greater than market movement. Negative numbers show movement the opposite of market direction.

Five Oil Dogs Net 18% to 38% by July 2014

Five possible profit generating stock trades from $1k invested in each revealed by Yahoo Finance for 2014 were:

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Cenovus Energy netted $380.67, based on dividends plus a mean target price estimate by thirteen analysts less $20 in broker fees. The Beta number showed this estimate subject to volatility 20% greater than the market as a whole.

China Petroleum & Chemical netted $314.97 based on dividends plus a mean target price estimate from three analysts less $20 in broker fees. The Beta number showed this estimate subject to volatility 49% less than the market as a whole.

PetroChina netted $272.55 based on a mean target price estimate from four analysts combined with projected annual dividend less $20 in estimated broker fees. The Beta number showed this estimate subject to volatility 13% less than the market as a whole.

Statoil ASA netted $203.04, based on dividend plus mean target price estimates from fifty analysts less the usual broker fee. The Beta number showed this estimate subject to volatility 56% greater than the market as a whole.

BP plc netted $182.39 based on dividends plus a mean target price estimate from nine analysts less the broker fees. The Beta number showed this estimate subject to volatility 99% greater than the market as a whole.

The average net gain in dividend and price was over 27% on $5k invested in these five stocks. This gain estimate was subject to average volatility 23% greater than the market as a whole.

Net gain estimates above did not factor in any foreign or domestic tax problems resulting from distributions. Consult your tax advisor regarding the source and consequences of "dividends" from any investment.

The stocks listed above were suggested only as decent starting points for your stock purchase research process. These were not recommendations.

Disclaimer: This article is for informational and educational purposes only and should not be construed to constitute investment advice. Nothing contained herein shall constitute a solicitation, recommendation or endorsement to buy or sell any security. Prices and returns on equities in this article except as noted are listed without consideration of fees, commissions, taxes, penalties, or interest payable due to purchasing, holding, or selling same.

Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.