T. Boone Pickens' Stock Picks With The Highest Upside Potential

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Includes: CHK, DVN, EOG, HAL, MMR, NOV, OXY, SD, SLB, XOM
by: Insider Monkey

T. Boone Pickens had decades of experience before he founded BP Capital Management, a hedge fund focusing on investments in energy futures and stocks of companies in energy sectors and energy dependent industries. BP Capital invests 80% in equities and 10% in commodities, and returned an average of 38% per year through mid 2007 since starting in August 2001.

We believe that by focusing on the stock picks of Pickens, especially those with the highest upside potential, investors are more likely to beat the market in the long term. Below we compiled a list of stocks with high upside potential in the latest 13F portfolio of BP Capital Management. All companies have at least $2 billion market cap and average analyst recommendation scores lower than 2.5, which means buy or better. The market data is sourced from Finviz.

Company Name

Ticker

Value

Activity

Analyst Recom

NATIONAL OILWELL VARCO

NOV

9192

-14%

1.6

HALLIBURTON

HAL

3861

-51%

1.7

SCHLUMBERGER LTD

SLB

3041

-63%

1.9

DEVON ENERGY

DVN

7762

New

2

OCCIDENTAL PETROLEUM

OXY

4080

-52%

2

CHESAPEAKE ENERGY

CHK

14565

-45%

2.1

MCMORAN EXPLORATION

MMR

10885

-3%

2.1

EOG RESOURCES INC

EOG

7560

-45%

2.2

EXXON MOBIL CORP

XOM

6850

New

2.2

SANDRIDGE ENERGY INC

SD

6569

-40%

2.3

Click to enlarge

The stock with the highest upside potential in Pickens’ portfolio is National Oilwell Varco, in which Pickens had $9.2 million invested. NOV has a market cap of $27.8B and a P/E ratio of 14.93. The average analyst recommendation score for NOV is 1.6. Since the end of September, NOV returned 28.16%, heavily beating the market by 20 percentage points. Ken Fisher’s Fisher Asset Management also invested $362 million in NOV at the end of September.

Chesapeake Energy Corp (NYSE:CHK) is the biggest position in the latest 13F portfolio of BP Capital. As of September 30, the fund reported to own $14.6 million of CHK. The stock has a market cap of $15.2B and a P/E ratio of 12.35. CHK lost 10.06% since the end of the third quarter, but the average analyst recommendation score for CHK is 2.1, indicating some form of perceived value of the stock. Curtis Macnguyen’s Ivory Capital owned $71 million of CHK at the end of September.

Pickens is also bullish about Exxon Mobil Corp (NYSE:XOM). During the third quarter, BP Capital initiated a brand new $6.9 million stake of XOM. XOM has a market cap of $384B and a P/E ratio of 9.66. The average analyst recommendation score for XOM is 2.2. Since the end of September, XOM returned 11.02%, versus 8.14% for SPY in the same period. Ken Fisher is bullish about XOM as well. As of September 30, Fisher Asset Management disclosed owning $500-plus million of XOM shares.

Other stocks with high upside potential that Pickens is bullish about are Halliburton Company (NYSE:HAL), Schlumberger Ltd (NYSE:SLB), Devon Energy Corp (NYSE:DVN), Occidental Petroleum Corp (NYSE:OXY), McMoran Exploration Co (NYSE:MMR), EOG Resources Inc (NYSE:EOG) and Sandridge Energy Inc (NYSE:SD). We like Pickens. His past experience in the oil industry is invaluable to a hedge fund focusing on the energy sector. We strongly recommend investors to do in-depth research on Pickens’ stock picks with the highest upside potential for their own portfolio.

Disclosure: I am long CHK.