The stock market has been alarmingly volatile in the past few years. Only a few companies had been ultimate gainers in spite of the volatility. The energy industry has got a few bunches of gainers in terms of quite high positive weighted alpha values. High alpha values show that the stocks had an increase in price performance and other affirmative indicators. I have picked five companies from the energy industry those currently have +30 or more as their weighted alpha values. The following analysis will help you to decide whether you should invest in them based on cross sectional analysis.
Crosstex Energy (XTXI)
The price of this stock had experienced several roller coaster rides in the last few years. It rose to a price of $40 in 2006, and then went all the way down to an impossibly low price of $1.10 during the time of recession in 2008. Nevertheless, the company impressively improved throughout 2009 and 2010. The management team efficiently pulled it out of its extremely indebted situation, and it started selling at $17 by early 2011. It fell to $8.33 again in August 2011, and now it is selling again around $15.
The fear of oil price volatility pulled down the share price at times. The company’s debt to equity ratio of about 4 to 1 has also geared this fall. However, the company has an inventory turnover ratio of 119.6, which is enormous if we compare it with the industry average of 24.9 and S&P 500 average of 8.3. Besides, the dividend yield rate for the stock is 9.4, which is also much higher than many of its peers. Even with a negative net income, the company has managed to share a decent deal of cash dividends because of its strong cash flow and liquidity. No analyst suggests selling this stock at this stage. Some analysts suggest purchasing this stock while the leverage will be lower. Many others suggest for a cautious observation for the time being.
El Paso Corp. (EP)
The earnings per share for EP are estimated at $0.26 just before the company unveils its third quarter financial and activity report. This is almost 20% higher than the earnings per share in the same quarter last year. The net profit for the company is estimated at $1.1 which has also risen about 10% from the previous year. The company also managed to increase its 2011 estimated revenue by 6.3%. Besides, Kinder Morgan Inc (KMI) takeover deal at a premium price in October has pushed the stock’s price from $17 to $25. While one of its real close competitors Spectra Energy (SE) has achieved a year to date performance of 20.86%, the YTD performance of EP stands at 84.29%. Because of its strong financial performance and bullish tendency in the stock market, most of the analysts are pretty optimistic about the share and its performance as they rate this stock either as a buy or as a hold.
Atlas Energy Ll (ATLS)
ATLS share price had a hike after the second quarter as they reported an increase in net income per share compared to the previous quarter. However, later the market realized that, the increase was mainly due to its subsidiary Lightfoot’s gain from the sale of International Resources Partners. The price fell afterwards based on that. But in the last month, ATLS had performed quite well after their expansion news and their report 9% increase on quarterly distribution per share unit. Overall, its stock had seen a price growth of about 150% this year. This company’s dividend yield is about 5%, and free cash flow payout ratio is about 75%; most of the analysts suggest buying this stock when leverage is still low. This low leverage means that the risk level of investment for ATLS is pretty low, as its price to book ratio is only 2.09. However, any investors should step ahead considering the fact that the volumes of trade for this stock is pretty low compared to its peers.
Williams Companies (WMB)
This stock experienced a downward fall in price after it had reached close to its 52 week’s high in the last week. Currently its annual dividend yield is $2.71 which is in pretty solid shape if we compare the average dividend yield of $2.07 of the S&P 500 companies. Though, the company has reported earnings per share of $0.40 and decided to increase its dividends by $1.00 per share, most of the analysts assume that the share had already reached its peak price for this year as it has risen above 36% in the past 12 months. Besides, the price to book value of WMB stock is higher than the industry average. Therefore, a careful observation is suggested for the stockholder who wants to hold it a little longer. Buying is not suggested by the analysts at this point. They strongly suggest selling the share if the stock holders are already on profit with this stock.
Enbridge Inc (ENB)
This company is in pretty decent shape in terms of revenue and earnings per share. This year the management of the company announced a stock split in May to make its stocks reasonably priced. But the because of its strong financial performance the price swung back to the previous price, now selling at $34.27. For the S&P 500 companies, the average price hike had been only 2.07% so far, whilst ENB had an increase of about 22.16%. Its price to sell and price to book ratio is 1.53 and 3.42 respectively. Compared to the industry average, its price seems to be a little high. However, the company is performing exceptionally well on the profit side. Therefore, analysts suggests the interested investors to have a close eye on this stock, and buy only if there is a downward revision of price. Otherwise, holding is recommended.
Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.