Last month was disastrous for those bullish on crude oil. Crude oil fell off the cliff and lost 11.4%.
The quarterly performance of crude oil was even worse than the Dow Jones Industrial average. In the last quarter, the Dow Jones Industrial average lost 12.2%, whereas crude oil lost 17.5%. During the height of the Libyan crises, crude oil spiked all the way up to $115. Once the Mid-East dust settled, the Euro-Greek concerns dominated the scene. Due to increased concerns about global recovery, crude oil closed the last quarter at $78.25, almost 32% lower than its May peak.
Naturally, big oil companies, whose stocks are highly correlated with oil prices, were adversely affected. The downward trend might continue for a while, but I expect crude oil to close around $100 by the end of 2011. For contrarian investors, the recent sell-off in oil stocks created a good opportunity to buy these stocks below their fair values.
Here is a list of 8 low P/E, and high-yield large caps that are trading with single digit P/E ratios. All companies listed have a minimum yield of 4%.
Company name | Symbol | Market Cap | P/E ratio | Div yield (%) | O-Metrix Score |
BP plc (ADR) | 113.87B | 5.70 | 4.66 | 8.18 | |
ConocoPhillips | 89.23B | 7.97 | 4.17 | 8.53 | |
Eni S.p.A. (ADR) | 63.63B | 7.79 | 7.99 | 11.45 | |
Petroleo Brasileiro SA (ADR) | 146.42B | 5.7 | 5.32 | 11.71 | |
Royal Dutch Shell plc (ADR) | 192.55B | 6.7 | 5.46 | N/A | |
SeaDrill Limited | 12.85B | 5.86 | 10.90 | 14.83 | |
Statoil ASA (ADR) | 68.72B | 6.05 | 5.34 | 9.78 | |
TOTAL S.A. (ADR) | 98.66B | 6.36 | 7.47 | 8.59 |
(Data from Google Finance/Finviz/Morningstar, and is current as of September 30 close. You can download O-Metrix Calculator, here.)
BP Plc (BP) is a UK-headquartered major integrated oil & gas company. As of the September 30 close, the stock was trading with a low P/E ratio of 5.7 and a lower forward P/E ratio of 5.17. Sales increased by 36.87% in the last quarter. P/S, P/B, and P/C ratios stand at 0.32, 1.06, and 5.65, respectively. Analysts estimate 4.23% EPS growth for the next 5 years. With a yield of 4.66%, BP has an O-Metrix score of 8.18.
Headquartered in Texas, ConocoPhillips (COP) is one of my favorite oil stocks. At a price of $63, the stock is trading 21% below its 52-week high. Trailing P/E ratio is 7.97, whereas the forward P/E ratio is 7.23. Analysts mean target price of $80.58 imply almost 30% upside potential. P/S, P/B, and P/C ratios stand at 0.38, 1.27, and 10.68, respectively. Analysts estimate 8.8% EPS growth for the next 5 years. With a yield of 4.17% ConocoPhillips has an O-Metrix score of 8.53.
Eni SpA (E) is trading at $35, which is 30% below its 52-week high. As of September 30, the stock is trading with a low trailing P/E ratio 7.79, and a lower forward P/E ratio of 6.22. Analysts mean target price of $54 imply almost 55% upside potential. P/S, P/B, and P/C ratios stand at 0.5, 0.91, and 28.50, respectively. Analysts estimate 8.05% EPS growth for the next 5 years. With a nifty yield of 7.99% Eni SpA has an O-Metrix score of 11.45.
Petroleo Brasileiro (PBR) is trading at $22.45, which is 47% below its 52-week high. As of September 30, the stock is trading with a low trailing P/E ratio 5.7, and a lower forward P/E ratio of 6.10. Analysts mean target price of $43.68 imply almost 95% upside potential. P/S, P/B, and P/C ratios stand at 1.17, 0.77, and 3.82, respectively. Analysts estimate 8.50% EPS growth for the next 5 years. With a nifty yield of 5.32% Petroleo Brasileiro has an O-Metrix score of 11.71.
Seadrill Limited (SDRL) is trading at $27.5, which is 24% below its 52-week high. As of September 30, the stock is trading with a low trailing P/E ratio 5.86, and a lower forward P/E ratio of 8.37. Analysts mean target price of $38.56 imply almost 40% upside potential. P/S and P/B ratios stand at 2.95 and 1.91, respectively. Analysts estimate 10.20% EPS growth for the next 5 years. With a nifty yield of 10.90% SeaDrill has an O-Metrix score of 14.83.
Statoil ASA (STO) is trading at $21.55, which is 24% below its 52-week high. As of September 30, the stock is trading with a low trailing P/E ratio 6.05, and a forward P/E ratio of 7.23. Analysts mean target price of $26.78 imply almost 20% upside potential. P/S, P/B, and P/C ratios stand at 0.68, 1.67, and 5.14, respectively. Analysts estimate 7.65% EPS growth for the next 5 years. With a yield of 5.34% Statoil has an O-Metrix score of 9.78.
Total SA (TOT) is trading at $43.87, which is 29% below its 52-week high. As of September 30, the stock is trading with a low trailing P/E ratio 6.36, and a lower forward P/E ratio of 5.83. Analysts mean target price of $61.73 imply almost 40% upside potential. P/S, P/B, and P/C ratios stand at 0.5, 1.19, and 5.74, respectively. Analysts estimate 3% EPS growth for the next 5 years. With a nifty yield of 7.47% Total SA has an O-Metrix score of 8.59.
Royal Dutch Shell (RDS.A) is trading at $62, which is 19.42% below its 52-week high. As of September 30, the stock is trading with a low trailing P/E ratio 6.7. P/S, P/B, and P/CF ratios stand at 0.4, 1.1, and 5.6, respectively. Projected yield is 5.46%. The latest dividend date was August 3rd, where shareholders enjoyed $0.84 of dividend per share. Its debt to equity ratio of 0.2 is below the market average of 0.6.
Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.
