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Key Energy Services, Inc. (NYSE:KEG) is one of the most traded stocks with an average volume of over 2.8 million shares traded daily. As a drilling and exploration company, many investors are interested in it as a possible inflation play. But internet investors should not concentrate on KEG just because it is popular.

As simple as it sounds, you are better off shopping around than focusing on popular stocks. There are many stocks in the basic materials sector. Moreover, many of them are trading at lower price multiples and have brighter growth prospects.

Instead of popularity, KEG's earnings and future cash flows will determine its value. The future financial potential of a stock can be gauged by using financial metrics to determine how cheaply a stock is priced, its ability to weather hardship, and its growth potential.

As alternatives to KEG, consider the following stocks with strong track records and solid credit scores:

Ticker

Company

Industry

10-Year Average ROE

Altman Z-score

BHI

Baker Hughes Incorporated

Oil & Gas Equipment & Services

16.4%

3.33

DK

Delek US Holdings Inc.

Oil & Gas Refining & Marketing

11.0%

4.14

HFC

HollyFrontier Corporation

Oil & Gas Refining & Marketing

26.0%

3.14

KMGB

KMG Chemicals Inc.

Specialty Chemicals

12.1%

4.22

MUR

Murphy Oil Corporation

Oil & Gas Refining & Marketing

19.0%

4.17

NUE

Nucor Corporation

Steel & Iron

17.1%

3.70

KEG

Key Energy Services Inc.

Oil & Gas Drilling & Exploration

6.3%

2.24

Unlike KEG, these alternative stocks are all categorized as "safe" according to the Altman Z-score*, indicating that they are not considered bankruptcy risks. Moreover, the average 10-year return on equity demonstrates that these six stocks have grown shareholder wealth at respectable annual rates. It is clear from these two metrics that each of these five alternatives is a high-quality stock capable of weathering bad times and delivering positive long-term results.

What's more, these stocks are cheaper and have higher growth prospects:

Ticker

P/E

P/S

P/B

EPS growth past 5 years

EPS growth next 5 years

BHI

12.22

1.07

1.33

-11.3%

27.4%

DK

8.91

0.13

1.22

11.8%

15.0%

HFC

6.63

0.57

1.43

-5.7%

23.8%

KMGB

21.34

0.75

2.09

6.3%

15.0%

MUR

16.48

0.44

1.37

2.3%

13.6%

NUE

18.02

0.7

1.87

-15.5%

24.9%

KEG

46.03

1.44

2.12

-22.6%

12.0%

Based on lower price-to-earnings ratios, price-to-sales ratios, and price-to-book ratios, these stocks are cheaper than KEG at current market prices. Better yet, they have better growth prospects according to analyst projections and past growth trends. Rather than restrict yourself to concentrated investments in one popular stock like KEG, consider a diversified mix of these six securities as a more attractive alternative.

*Please read the article disclaimer.

Source: A Six-Pack Of Stocks To Beat Key Energy