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  • Cut The Guesswork Here Are The Best Energy Stocks Of 2010 0 comments
    Aug 4, 2010 9:24 AM | about stocks: ATW, BRS, CVX, DO, ESV, MUR, NE, NFX, RDC, RIG, SUG, TTI

     Our favorite stocks to obsess over are energy stocks.  Here is a solid list for you to do some research on.  Read over the due diligence and click on the links to read more about these stocks.

    Study after study has shown that stocks with low price-to-earnings multiples significantly outperform high P/E stocks. Research from my favorite investing guru, NYU professor Aswath Damodaran, pegged the outperformance at anywhere from 9% to 12% per year, depending on the study period. That's big money we're talking about.

    You might be thinking wait a minute... but hold on;

    There are 234 energy companies with market caps topping $500 million on major U.S. exchanges. They have an average forward P/E of 26.9. Here are my parameters:

    1. In order to stay away from bankruptcy risk, I used Damodaran's suggestion, and only considered companies with total debt less than 60% of capital.
    2. In hopes of capturing a reasonable amount of growth, I looked at Capital IQ's long-term estimates, and kept only companies expected to grow EPS at 5% annually or better over the next five years. Furthermore, I required at least 5% annualized growth over the past five years.

    Expect to see more coverage and research posted to our site in the coming weeks as well as updated videos about market topics that can be viewed on our investment channel. Find out more information about oil stocks and the supporting research.

    Of the 44 companies passing the screen, here are the 15 with the lowest forward price-to-earnings multiples:

    Company Market Cap (in millions) Forward P/E Debt-to-Capital Estimated EPS
    Transocean (NYSE: RIG) $14,784 6.1 35% 16%
    Atwood Oceanics(NYSE:ATW) $1,752 6.5 17% 10%
    Alliance Resource Partners
    (Nasdaq: ARLP)
    $1,918 7.9 53% 10%
    Noble (NYSE: NE) $8,315 7.9 9% 16%
    Chevron (NYSE: CVX) $153,079 8.0 10% 14%
    Diamond Offshore Drilling
    (NYSE: DO)
    $8,271 8.3 29% 21%
    Rowan Companies(NYSE:RDC) $2,890 10.1 21% 18%
    Bristow Group(NYSE: BRS) $1,201 10.4 35% 6%
    Hess (NYSE: HES) $17,596 11.2 23% 9%
    Murphy Oil (NYSE: MUR) $10,484 11.6 14% 14%
    Ensco (NYSE: ESV) $5,979 11.6 4% 7%
    Newfield Exploration(NYSE:NFX) $7,143 11.7 41% 7%
    TETRA Technologies(NYSE:TTI) $789 12.1 35% 16%
    World Fuel Services(NYSE:INT) $1,547 12.3 2% 10%
    Southern Union(NYSE: SUG) $2,809 12.3 59% 10%
    Oil Stocks You Should be Considering For 2nd Half: Don’t Miss The Next Rally!
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