Jim Cramer is known for his top performing returns when running a hedge fund and for his stock picks on the "Mad Money" television show. Recently, Cramer has been telling investors to consider some attractive oil and energy stocks, many of which have dropped due to concerns about the debt crisis in Europe. The ultimate resolution for Europe might lead to loose money policies and inflation. Many believe the European Central Bank (ECB) needs to lower rates and print money, much as the Federal Reserve did in the last financial crisis. When you consider that oil is trading at about $99 per barrel, that is a sign that there will be no global economic calamity. In fact, the high price of oil in the midst of a weak economy is probably indicating that oil markets are betting that Germany will ultimately allow the ECB to lower rates and print money. Money printing and low interest rates tends to lead to inflation, and this would support much higher oil prices. Here are some oil and energy stocks that Cramer finds compelling now:
EOG Resources (NYSE:EOG) is a leading natural gas and crude oil company. EOG 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. The article link above states "Cramer picked EOG Resources as one of the best single ways to play the many large oil discoveries in the U.S."
Here are some key points for EOG:
Current share price: $95.59
The 52-week range is $66.81 to $121.44
Earnings estimates for 2011: $3.45 per share
Earnings estimates for 2012: $4.40 per share
Annual dividend: 64 cents per share, which yields .7%
Chesapeake Energy Corporation (NYSE:CHK) is one of the leading natural gas companies in the United States. It has interests in the Barnett Shale, the Haynesville and Bossier Shales, the Fayetteville Shale, the Marcellus Shale and the Eagle Ford Shale. Cramer has given this stock a buy rating and thinks this company could become one of the country's top 5 producers. I believe Chesapeake could trade around $40 in the next couple of years, but that would most likely depend on stronger natural gas prices and lower unemployment.
Here are some key points for CHK:
Current share price: $23.36
The 52-week range is $21.11 to $35.95
Earnings estimates for 2011: $2.86 per share
Earnings estimates for 2012: $2.51 per share
Annual dividend: 35 cents per share, which yields 1.6%
Energy Transfer Partners (NYSE:ETP) provides natural gas pipeline and transportation services, and sells propane in the United States. This stock offers a strong dividend payout and yields over 8%. These shares look attractive for both the dividend and potential price appreciation, especially if they trade down to about $39, which is a level the stock hit in October. This company recently did a secondary offering and since that increases the supply of stock, we could see continued weakness for a while. The company sold 13,250,000 common shares at $44.67 each. Cramer thinks the lower stock price is a buying opportunity. The company is about to sell the propane division for $2.9 billion and Cramer thinks that will be a positive move for the stock.
Here are some key points for ETP:
Current share price: $43.66
The 52-week range is $38.08 to $55.50
Earnings estimates for 2011: $1.60 per share
Earnings estimates for 2012: $2.50 per share
Annual dividend: $3.58 per share, which yields 8.2%
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. Chances are dividends will also grow with earnings and offer investors a hedge against inflation. Warren Buffett (through Berkshire Hathaway) owns about 29 million shares, which is a stake of about $2 billion. Cramer likes Conoco because of the solid yield, and the company’s buyback of shares and plans for a stock split.
Here are some key points for COP:
Current share price: $67.27
The 52-week range is $58.65 to $81.80
Earnings estimates for 2011: $8.63 per share
Earnings estimates for 2012: $8.39 per share
Annual dividend: $2.64 per share, which yields 4%
Kinder Morgan Energy Partners (NYSE:KMP) owns and manages oil and natural gas pipelines and fuel storage centers. Kinder Morgan has remained strong during market corrections and only dipped about 10% from recent highs amidst all the turmoil. A strong dividend yield of over 6% and a stable revenue source keeps this stock from large sell-offs. This stock is trading near the 52-week high, so it makes sense to wait for dips. Cramer thinks there could be growth in the future distributions to shareholders.
Here are some key points for KMP:
Current share price: $76.92
The 52-week range is $63.42 to $78
Earnings estimates for 2011: $1.80 per share
Earnings estimates for 2012: $2.30 per share
Annual dividend: $4.64 per share, which yields 6.10%
Ensco PLC (NYSE:ESV) is a major offshore oil and gas drilling contractor that operates worldwide with a fleet of 42 jackup rigs, 4 ultra-deepwater semi-submersible rigs, and a barge rig. This stock looks like a solid value now and even more so on any dips. It pays a strong dividend with a yield of 2.9%, and trades for just about 8 times 2012 earnings. Cramer finds the dividend yield attractive.
Here are some key points for ESV:
Current share price: $49.14
The 52-week range is $37.39 to $60.31
Earnings estimates for 2011: $3.18 per share
Earnings estimates for 2012: $5.95 per share
Annual dividend: $1.40 per share, which yields 2.9%
Book value: $41.73 per share
Apache Corp (NYSE:APA) is a oil and natural gas company with projects in the Gulf of Mexico, Texas, the Permian basin, the Anadarko basin, Canada, Egypt, Australia, and more. A director recently bought 2,000 shares, another director bought 5,000 shares, and an officer bought 5,000 shares. Cramer finds the growth potential attractive and expects the shares to go higher.
Here are some key points for APA:
Current share price: $90.87
The 52-week range is $73.04 to $134.13
Earnings estimates for 2011: $11.78 per share
Earnings estimates for 2012: $12.30 per share
Annual dividend: 60 cents per share, which yields .7%
Data sourced from Yahoo Finance. No guarantees or representations are made.
Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.
Disclaimer: 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.