Seeking Alpha
Value, growth at reasonable price, contrarian
Profile| Send Message|
( followers)  

Oil prices have dropped sharply from the 2011 highs, along with stocks and many other commodities. Many investors believe the global economy could be headed for recession or something worse. Many believe that the recent plunge in the price of copper, oil and junk bonds is a sign we are heading for recession. I have to agree that things don't look great, but recessions don't last forever, and they often create great buying opportunities.

A recent article on Forbes.com details why oil could bounce off recent lows and average about $115 per barrel in 2012:

As oil continued to tumble, along with the commodities complex in general, equities, emerging market currencies, and everything but the safest of safe assets (the U.S. dollar), investors began to reassess their views of the essential commodity. Prices could continue to tumble, JPMorgan’s commodities research team argues, but crude oil will trade range-bound through 2012, at an average Brent price of $115 per barrel.

Here are a number of oil stocks that look like bargains now. Investors who accumulate these stocks over the next few months could see strong gains if oil reaches JPMorgan's $115 per barrel target:

Exxon (NYSE:XOM) is a major integrated oil company based in Texas with operations worldwide, which include refining, exploration, and more. Exxon stock has been declining due to lower oil prices and stock market weakness over debt concerns in Europe. It now trades at a very cheap price to earnings ratio of about 8, and pays a solid dividend.

Here are some key points for XOM:

  • Current share price: $76.27
  • The 52 week range is $63.93 to $88.23
  • Earnings estimates for 2011: $8.56 per share
  • Earnings estimates for 2012: $8.73 per share
  • Annual dividend: about $1.88 per share which yields about 2.6%

ConocoPhillips (NYSE:COP) is one of the largest integrated oil and gas companies. This company is involved in exploration, production, processing, and transportation of various energy products and fuels. This company has extensive oil and gas reserves which will increase in value as energy prices rise. ConocoPhillips shares almost hit a new 52-week low this week, but then rebounded. It looks like a solid buy on any dips.

Here are some key points for COP:

  • Current share price: $67.02
  • The 52 week range is $58.37 to $81.80
  • Earnings estimates for 2011: $8.27 per share
  • Earnings estimates for 2012: $8.57 per share
  • Annual dividend: $2.64 per share which yields 4.1%

EOG Resources (NYSE:EOG) is a leading natural gas and crude oil company. EOG's has interests in the United States, Canada, the Republic of Trinidad, Tobago, the United Kingdom, and China. EOG Resources also has a joint venture agreement to develop fields located in the Eagle Ford shale region. This stock has bounced sharply off the recent lows, so I would wait for a possible re-test of those lows before buying more heavily.

Here are some key points for EOG:

  • Current share price: $80.14
  • The 52 week range is $66.81 to $121.44
  • Earnings estimates for 2011: $3.44 per share
  • Earnings estimates for 2012: $4.93 per share
  • Annual dividend: 64 cents per share which yields .9%

Transocean (NYSE:RIG) is a major offshore oil and gas drilling contractor that operates worldwide with a fleet of about 138 mobile offshore rigs that it either owns or operates. This company is still dealing with legal issues and liability from the BP oil spill, but things are looking up and the stock looks cheap on any dips.

Here are some key points for RIG:

  • Current share price: $48.99
  • The 52 week range is $43.15 to $85.98
  • Earnings estimates for 2011: $3.56 per share
  • Earnings estimates for 2012: $5.90 per share
  • Annual dividend: about $3 which yields 6.8%

Marathon Oil Corporation is a leading oil exploration and production company. The price to earnings ratio is only about 7, and the dividend is nearly 2.5%. Plus, this stock is trading just above book value, which is $23.40. This stock was trading around $31 per share just a few weeks ago, and now is at bargain levels.

Here are some key points for MRO:

  • Current share price: $23.55
  • The 52 week range is $19.13 to $54.33.
  • Earnings estimates for 2011: $3.55 per share
  • Earnings estimates for 2012: $3.67 per share
  • Annual dividend: 60 cents per share which yields 2.7%

Noble Energy (NYSE:NBL) is a oil and gas company based in Texas. This is not my favorite oil stock, and the shares have rebounded off the recent lows, so I would wait for another dip below $70 per share before considering a buy here.

Here are some key points for NBL:

  • Current share price: $80.54
  • The 52 week range is $65.91 to $101.24
  • Earnings estimates for 2011: $4.91 per share
  • Earnings estimates for 2012: $6.87 per share
  • Annual dividend: about 88 cents per share which yields about 1.2%

Hornbeck Offshore Services (NYSE:HOS) provides offshore supply vessels to the oil and gas industry. After the BP oil spill, oil operations in the Gulf of Mexico were greatly reduced, but things are picking up for many companies now. I would wait for dips to the low $20 range before buying.

Here are some key points for HOS:

  • Current share price: $28.82
  • The 52 week range is $19.466 to $31.77
  • Earnings estimates for 2011: a loss of about 60 cents per share
  • Earnings estimates for 2012: $1.40 per share
  • Annual dividend: none

Data sourced from Yahoo Finance.

Disclaimer: No guarantees or representations are made. Hawkinvest is not a registered investment advisor and does not provide specific investment advice. The information is for informational purposes only. You should always consult a financial advisor.

Source: 7 Energy Stocks To Buy Before Oil Hits $115