Oil stocks have been volatile in the past few months as investors moved between very negative headlines from the European debt crisis and concerns over a slowdown in China, to euphoria when oil jumps over $100 per barrel due to speculation that Iran might try to close the Strait of Hormuz. Having exposure to oil makes sense for almost every portfolio, since almost everyone uses oil now in some way and will continue to do so in the future. Investing in oil is also a great way to hedge your portfolio against inflation as central bankers around the world continue to print easy money.
Buying oil stocks that are in an overall uptrend is likely to pay off for investors, especially if they buy on dips. Stocks that are in a solid uptrend often continue to outperform. Here are a few high quality oil stocks that are trending higher and likely to post additional gains in 2012:
EOG Resources (NYSE:EOG) shares are trading at $103.17. EOG is an independent oil and gas company, based in Texas. These shares have traded in a range between $66.81 to $121.44 in the past 52 weeks. The 50-day moving average is $98.08, and the 200-day moving average is $98.67. Earnings estimates for EOG are just $3.49 per share in 2011, and $4.56 for 2012. EOG pays a small dividend of 64 cents per share which gives a yield of .6%. The dividend has been raised each year for the past 12 years. This stock hit lows of about $67.50 in October, but it has been in a solid uptrend ever since. Buying on dips has been paying off and that is likely to continue in 2012. The company is focused primarily on crude oil and has laid out plans for growth of about 30% for the coming year. EOG might be able to increase reserve potential at the Eagle Ford project through tighter spacing.
ConocoPhillips (NYSE:COP) is trading at $72.01. ConocoPhillips is a major integrated oil and gas company that engages in the exploration, production and marketing of oil and natural gas. This company operates worldwide and is based in Houston, TX. These shares have traded in a range between $58.65 to $81.80 in the last 52 weeks. The 50-day moving average is $70.74 and the 200-day moving average is $70.45. Earnings estimates for COP are at $8.70 per share in 2011, and $8.42 for 2012. The dividend is $2.64 per share which provides a 3.6% yield. In early October, this stock dipped to about $60, but has been rising since. Conoco is a great low-risk way to add oil exposure to a portfolio. Recently, it has paid off to buy on dips to about $68. Conoco should have a good year because it plans to "reposition" the company and separate into two companies. The second company will be called "Phillips 66" and it will focus on the downstream business of refining and chemicals, etc. The spin-off is expected to be completed in the second quarter of 2012, and the company believes it will create shareholder value.
Copano Energy LLC (NASDAQ:CPNO) shares are trading at $35.12. Copano owns natural gas pipelines, and is based in Texas. The 50-day moving average is about $32.94 and the 200-day moving average is $32.29. Earnings estimates for CPNO are about 2 cents per share in 2011, and 90 cents for 2012. The dividend is $2.30 per share, which provides a 6.7% yield. Some analysts and investors believe that Copano could receive a takeover offer from a larger energy company. Just weeks ago, this company announced a joint venture with Magellan Midstream Partners (NYSE:MMP) to create a pipeline for delivering Eagle Ford shale condensate to Texas. The pipeline is expected to have an initial capacity of 100,000 barrels per day, and investors could get more interested as the pipeline construction makes progress in 2012. After bottoming out around $27 in October, this stock has been steadily moving higher. Copano shares are slightly overbought now, so waiting for pullbacks to about $33 or less makes sense.
Talisman Energy (NYSE:TLM) is trading at $12.12. TLM is a independent oil and gas company, based in Canada. These shares have a 52 week range of $10.75 and $25.21. The 50-day moving average is $12.97 and the 200-day moving average is $17.11. Earnings estimates for TLM are for a profit of 79 cents per share in 2011, and $1.35 per share in 2012. Talisman pays a dividend of 27 cents per share which is equivalent to a yield of 2%. Talisman recently announced the capital plan for 2012. The company plans to spend about $4 billion and it sees production growth of 5% for 2012. It also plans to sell $1 to $2 billion in non-core assets as part of a strategic repositioning. This stock had a tough 2011, but since bottoming out around $11 per share in mid-December, the stock has been rising. It's too early to call it a solid uptrend, but the shares are cheap enough to start accumulating.
Eagle Rock Energy Partners (NASDAQ:EROC) is trading at $11.34. Eagle Rock is a limited partnership engaged in the production of oil and gas. The company also operates pipelines for natural gas. These shares have traded in a range between $8.50 to $13 in the past 52 weeks. The 50-day moving average is $10.57 and the 200-day moving average is $10.41. Earnings estimates for EROC are at 35 cents per share in 2011, and 56 cents for 2012. Eagle Rock pays a dividend of 80 cents per share which is equivalent to a yield of 6.8%. The dividend has been rising in the past couple of years and could go higher in 2012. This company is hedged at about 80% in 2012, for its natural gas production. This should help reduce the risk and volatility that many natural gas companies are faced with as the commodity has continued lower. In early October, this stock traded at about $8.50 but has been in an uptrend ever since. Buying on dips is likely to provide gains in 2012 and the dividend adds to what could be continued substantial returns.
The data is sourced from Yahoo Finance, and Stockcharts.com. The information and data is believed to be accurate, but no guarantees or representations are made. Rougemont is not a registered investment advisor and does not provide specific investment advice. The information containedherein is for educational purposes only.
Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.