Citi: Chevron, ConocoPhillips, Total are best ways to play new energy wave

Big oil companies are in the early stages of a new cycle of profitability, and the best stocks to play the wave are Chevron (CVX), ConocoPhillips (COP) and Total (TOT), Citigroup analysts say.

Most companies took rising energy prices as justification for increasingly marginal investment, the firm says. but the winners in this cycle "will be those that can reverse this trend, better aligning their business with the needs of customers for cheaper energy," the Citi team says.

CVX is a leader in new oil sources in the Gulf of Mexico, COP's main growth driver is U.S. shale, and TOT has slowed high-cost developments, making the three Citi's “best value-adjusted opportunities” in the sector.

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Comments (11)
    , contributor
    Comments (5167) | Send Message
    Great choices , but would stick with CVX & COP and add BP (for value and dividend).
    10 Jul 2014, 07:50 PM Reply Like
  • Esekla
    , contributor
    Comments (4750) | Send Message
    I agree, Conoco is best in class. I'd think twice about Total.


    Also, producers newer extraction methods are more energy intensive. Producers that can reduce their EROI (Energy Return on Investment) are going to do best. The small technology providers that enable this will be multi-bagger candidates, albeit at higher risk.


    ERII is one such, with pilots already at multiple sites. My first two articles showing the potential received Pro status and thus are no longer public. The most recent warned about the stock price getting ahead of itself at $6 per share and linked to good public research on the company. With the stock back down near recent lows of $4.50, I believe the risk/reward is much more favorable. Blackrock apparently agrees as they've disclosed a 4.6% stake in the company.
    10 Jul 2014, 08:01 PM Reply Like
  • Whiterabbit66
    , contributor
    Comments (412) | Send Message
    I own COP, BP and TOT. Why think twice about TOT? It been my most successful stock overall the last 18 months and has had the best dividend percentage and increases. TOT also has a ton of upside.
    10 Jul 2014, 09:22 PM Reply Like
  • SWBanks
    , contributor
    Comments (263) | Send Message
    Any thoughts on what's been dogging TOT lately? I still like the company for its alternative energy investments and international exposure, as well as the dividend which is nice even after the French government takes its cut, but I'm down almost 5% since buying a few months ago. It's not going to get me to run as I think it's a solid play longer term, I would just like to get some insights into the shorter term recent sluggishness.
    10 Jul 2014, 10:00 PM Reply Like
  • Esekla
    , contributor
    Comments (4750) | Send Message
    I haven't looked at TOT in detail, but I don't see the international exposure as a positive, especially in the current world climate. As a matter of fact, divestiture of certain international holdings is one of the things I like best about COP. Even without the geo-political factors, North America has become by far the best climate the new wave of production technologies that I mentioned above.
    10 Jul 2014, 10:59 PM Reply Like
  • Whiterabbit66
    , contributor
    Comments (412) | Send Message
    I guess from my perspective I like the international exposure. I think the international oil companies are undervalued compared to the US ones.
    14 Jul 2014, 12:16 PM Reply Like
  • Archman Investor
    , contributor
    Comments (3377) | Send Message
    Fine companies. Only problem is: Citi is more than likely just talking their book.


    If you want to own energy related companies and use them as a core position: buy the pipeline companies.
    10 Jul 2014, 08:17 PM Reply Like
  • Alan1967
    , contributor
    Comments (241) | Send Message
    > Citi is more than likely just talking their book.


    This is a very interesting point, given this article.


    Global Oil Exploration Nears $1 Trillion - Where Are The Finds?



    I'm a CVX shareholder, but I do wonder if it isn't better to be buying stocks in the companies helping with the exploration/extraction rather than the majors.
    11 Jul 2014, 03:45 AM Reply Like
  • PalmDesertRat
    , contributor
    Comments (3838) | Send Message
    Good point-I own CVX and COP as well as SLB and IEZ. I've done much better with the oil service sector.
    11 Jul 2014, 07:46 AM Reply Like
  • Dorman Chasteen
    , contributor
    Comments (21) | Send Message
    Love cvX but I recommend COP for 3 reason.


    1. Lower price


    2. larger dividend


    3. More possibility of spin-off
    10 Jul 2014, 08:28 PM Reply Like
  • Bingy77
    , contributor
    Comments (252) | Send Message
    Lower price or price to earnings? The lower price doesn't really matter much. COP has a lower ttm p/e, but cvx has a lower forward p/e.


    Both companies yield approximately 3.20%.


    I would say CVX has a better chance of spinning off their downstream.
    10 Jul 2014, 09:02 PM Reply Like
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