The stock market correction and drop in oil prices has brought many energy stocks back to levels we haven't seen for awhile. The world economy is poised to need more and more oil in the future. Because of this, I think exposure to oil is a must for investors in the long run. While the price of oil has dropped, it has not declined to a level that indicates a global recession is looming. If the world avoids a recession, this could be one of the best times to buy energy stocks for the long term. These are the kind of market dips that patient investors should always be waiting for and acting on. Here are a number of energy stocks that have presented investors with a solid buying opportunity:
Statoil ASA (STO) is trading around $23.25. Statoil is a leading oil and gas company, based in Norway. These shares have traded in a range of $18.39 to $29.67 in the last 52 weeks. The 50-day moving average is $24.05 and the 200-day moving average is $24.03. STO is estimated to earn about $2.95 per share in 2011, and $3.24 in 2012. STO pays a solid dividend of about $1 per share, which is equivalent to a 4% yield.
Why Statoil shares are a great buying opportunity now: Oil prices remain solid and earnings should continue to grow for Statoil. Statoil's dividend is generous and easily covered by earnings, so it looks very safe and likely to rise over time. The concern of debt and the economy in Europe have pushed STO shares lower, but they are starting to climb back up.
Total SA (TOT) shares are trading around $47.50 per share. Based in France, Total is a major integrated oil company with operations worldwide. These shares have traded in a range of $43.81 to $64.44 over the past 52 weeks. The 50-day moving average is $53.77 and the 200-day moving average is $56.29. TOT earnings estimates are about $7.98 per share in 2011, and $8.20 in 2012. TOT pays a solid dividend of about $2.73 per share, which is equivalent to a 6% yield.
Why Total shares are a great buying opportunity now: The dividend is easily covered with earnings and both the dividend and earnings are likely to rise in the future. These shares are undervalued especially when compared with valuations of other major integrated oil names. The PE ratio is only about 7 and the dividend pays you to hold the stock. This stock has been pushed too low over European debt concerns, and now appears poised to rebound.
BMB Munai (KAZ) is trading around $1. BMB Munai is a independent oil and gas company based in Kazakhstan. KAZ has already received a buyout offer from MIE Holdings, which values the company at about $170 million or roughly $1.40 per share. Under the terms of the agreement, KAZ shareholders would receive an initial cash payment of somewhere between $1.04 to $1.10 at the time of closing and be entitled to an additional payment later. The company says, "The Company intends to make a second distribution to stockholders that could range up to approximately $0.30 per share following termination of the escrow...." This gives a total possible cash payout of around $1.40 per share, if you wait for the deal to close.
Why KAZ shares are a great buying opportunity now: All signs indicate the buyout deal is getting close to completion and it could close sometime in September. There is upside of about 50% for anyone buying at $1, if the deal closes with about a $1.40 cash payout. Before the market correction, this stock was about 15% higher. I expect the stock will continue to move up as we get closer to September and the first potential cash payment is announced. The financing is already in place and the deal just received approval from the Kazakh Ministry of Oil and Gas.
Kodiak Oil and Gas Corp. (KOG) is trading at $5.85. These shares have traded in a range of $2.43 to $7.70 in the last 52 weeks. The 50-day moving average is $6.03 and the 200-day moving average is $6.11. KOG is estimated to earn about 26 cents per share in 2011, and 76 cents in 2012.
Why Kodiak shares are a great buying opportunity now: The earnings estimates are for 26 cents per share in 2011, but analysts see profits jumping to 76 cents per share for 2012. If Kodiak achieves that level of profitability, these shares could jump significantly. This stock was trading around $7 just a few weeks ago, and has already started to bounce back up to those levels.
ENI SPA (E) is trading around $38.03. ENI is a major integrated oil and gas company, based in Italy. These shares have traded in a range of $33.93 to $53.80 in the last 52 weeks. The 50-day moving average is $49.41 and the 200-day moving average is $45.07. E is estimated to earn about $5.23 per share in 2011, and $5.96 for 2012.
Why ENI shares are a great buying opportunity now: Of all the major integrated oil companies, ENI is one of the cheapest stocks. Much of this is due to the debt crisis in Italy, but over the long term the debt problems in Italy are not likely to be significant for a major oil company with global operations.
Transocean (RIG) shares are trading at $56.08. Transocean is an offshore drilling company. These shares have traded in a range of $49.05 to $85.98 in the last 52 weeks. The 50-day moving average is $60.79 and the 200-day moving average is $70.12. Earnings estimates indicate a profit of $3.72 per share for 2011, and $5.82 for 2012.
Why RIG shares are a great buying opportunity now: RIG shares dropped significantly due to the company's involvement in the oil spill in the Gulf of Mexico, and have also dropped as the stock market corrected. I think it makes sense to average into this stock for the long term.
The data is sourced from Yahoo Finance. The information and data is believed to be accurate, but no guarantees or representations are made.
Disclaimer: Rougemont is not a registered investment advisor and does not provide specific investment advice. The information contained herein is for informational purposes.