Since the apparent surge in oil and gas prices, which began the early part of 2000s, there have been record breaking profits for these companies. The demand for oil continues to grow rapidly, and the position these companies have makes them great bets. Each of these companies are highly leveraged in the oil and gas industry, yet they continue to diversify their portfolios. I believe these three are a staple to a good portfolio, and have confidence we have not seen the best of these three yet:
1.) Chevron Corporation (NYSE:CVX) specializes in refining of crude oil, exploration, development, and production of crude oil and natural gas; processing, liquefaction, transportation, and regasification associated with liquefied natural gas; transportation of crude oil through pipelines; and transportation, storage, and marketing of natural gas, as well as holds interest in a gas-to-liquids projects. This company operates in the Major Integrated Oil & Gas industry and is currently trading at $95.46, and is a solid pick. The one-year analyst price target is $122.15, which represents a 28% upside potential. CVX boasts an unreal EPS of $13.5, which is higher than each of its competitors. CVX has a projected earnings growth ratio of 1.43, and currently pays a dividend yield of 3.3%. The 5-star S&P rated Chevron has a current debt/equity ratio of 9.89 and a long history of returns. This amount of excess cash enables debt reduction and a potential increase in dividend and acquisition ability. Finally, CVX has a leading deepwater acreage position; best among its peers in four key deepwater exploration areas - Angola, Brazil, Nigeria, and the Gulf of Mexico. This is a solid long-run position to have, and great time to buy.
2.) Enerplus Corporation (NYSE:ERF) operates as an independent oil and gas producer. The company's property interests are located in western Canada in the provinces of Alberta, British Columbia, Saskatchewan, and Manitoba, as well as in Montana, North Dakota, Pennsylvania, Maryland, and Delaware in the United States. Enerplus operates a land base of approximately 420,000 net acres. The current price is $25.27 with a one-year analyst price target of $28.61. This represents a 13.22% upside potential, not including its yearly dividend yield of 8.2%. With oil-and-gas investments, you're exposed to fluctuating commodity prices, but ERF does its best to mitigate that risk by maintaining one of the strongest balance sheets of its competitors. In addition, Enerplus carries on an active exploration and acquisition program to replace the oil and gas it pumps out of the ground, which makes this company a safe bet with a steady stream of income and no sign of the company going anywhere.
3.) ExxonMobil Corporation (NYSE:XOM) engages in the exploration and production of crude oil and natural gas, and the manufacture of petroleum products, as well as transportation and sale of crude oil, natural gas, and petroleum products. This company operates in the Major Integrated Oil & Gas industry and is currently trading at $76.82 with a one-year analyst price target of $89.94, which I believe will be even higher the following year and years to come. XOM has EPS of $7.59 and a P/E ratio of 10.01x. The current dividend yield is 2.4% and it also holds a 5-star S&P rating. Current price to book is 2.38 and the profit margin is 9.66%. Also, XOM has a beta of 0.53 making it a very safe bet with less volatility than the market itself. Oil & Gas are obvious picks, but when you are looking to make serious investments for the long XOM is a great buy. I love the fact that ExxonMobil has been successful in controlling inflationary costs through technology, planning, and contracting initiatives. XOM has one of the best-positioned major integrated oil companies with strong resource base and product diversity. This is a great addition to any portfolio, and a steal at the current price.
Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.