By Samuel Hutchinson
Assuming that the US economy continues to rebound during this period of recovery and Europe settles their fiscal concerns, now could be the absolute perfect opportunity to buy oil stock. The price of crude oil dipped in the past few months thanks in part to the European debt crisis and chaos in Libya, but appears to once again be on the rise. In the past few days Oil has reached the $100 mark for the first time in months, this comes after oil had been at a 52 week low of 76.50 in early October. If this is any sign of things to come, expect oil stock to be a desired investment for 2012. Here are the stocks with a key competitive advantage that should see success in the upcoming year:
Whiting Petroleum Corp. (NYSE:WLL): WLL stock is currently trading around $48 per share and is positioned to possibly double that figure. 52 week high sits at $75.91 and analysts are predicting that its price may reach or even surpass that high in the upcoming year. Whiting Petroleum possesses an abundance of acreage in shale basins on US soil, giving them a competitive advantage on those companies that import their oils from overseas. It was recently reported that Whiting will also see a decline in well costs, giving them less operational expenses. The company is capitalized at $5.768 billion and saw a net profit margin of 42.3% in the third quarter. It has a P/E ratio of 12.02 and a return on average equity of 28.97% for the third quarter. Anadarko Petroleum Corporation (NYSE:APC) may give WLL some competition, but it is likely that when oil prices start to rise there will be enough demand to go around. WLL stands as an optimistic pick for 2012.
Chevron Corp. (NYSE:CVX): CVX has maintained its position as a powerhouse in the energy sector for some time. Count on its diversity in services and locations in which it exploits to keep the company stable. Its stock is currently trading around $104 per share, and has been very consistent over time. Look to this stock as a good buy and hold stock, but do not expect much in terms of monumental increase. With dividends at $0.81 a share this stock should pay off well over the long term, and given the rebound in oil it has the makings of a very reliable pick. It may not be bringing in as much revenue as competitors such as BP plc (NYSE:BP) or Exxon Mobil Corporation (NYSE:XOM), but its gross margin is significantly higher at 32.09% and will keep the company competitive.
Occidental Petroleum Corp. (NYSE:OXY): OXY is currently trading at around $95 per share and has all the makings of a stock that is about to take off. Strong business philosophy and a focus on long-term growth make this an interesting pick. Revenue is not as high as some of the other big name oil companies at only $19 billion, but it makes up for it in efficiency and profitability. With a gross margin almost at 50% and a return on equity of 15% the company makes good use of its resources. Look for it to be a solid stock with the potential of steady increases.
Royal Dutch Shell PLC ADS B (NYSE:RDS.B): Royal Dutch Shell is currently trading around $70.00 per share. The company had third quarter revenues of $123 billion this year, compared to $90 billion in the third quarter of 2010. Third quarter net income was $7 billion, more than doubling net income from the third quarter last year. Shell currently has a P/E ratio of 7.3. With a market cap of over $200 billion, expect strong stability out of one of the largest integrated oil companies in the world. Dividends are at $0.84, yielding 4.57%. Strong dividend payouts and consistent growth make for a good buy and hold stock.
Statoil ASA ADS (STO): Statoil is currently trading around $25.00 per share. Statoil recently confirmed that it invested over $500 million with its partners in the North Sea field Visund North. The field is estimated to hold 29 million barrels of oil. This investment should prove profitable for the already profitable company. Stock price has stayed consistent with a 52 week range of $20.12 to $29.97. The company gives generous dividends at $1.15, yielding 4.42%. It had a return of assets of 9.39% compared to the sector’s 7.56%, and had a return on equity of 27.12% compared to the sector’s 13.55%. Analysts estimate steady growth over the next few quarters.
Kodiak Oil & Gas Corp (NYSE:KOG): As an up and coming corporation, Kodiak Oil & Gas is off to a good start. Currently trading at around $9.00, Kodiak has seen great increases in the past few months. Much of the benefit comes from the fact that it is primarily based in the United States, and is reaping many of the same benefits that Whiting Petroleum Corp is enjoying. Recent shale basin acquisitions have helped paved the way for Kodiak, and should give them opportunity for a bright future. Third quarter net profit margin is at an amazing 104.46% compared to a -9.66% in 2010. In terms of growth, Kodiak is one of the hottest stocks on the market right now. With the exception of Marathon Oil Corp. (NYSE:MRO), Kodiak absolutely blows all other competition out of the water, with its revenues equaling greater than its two biggest competitors, Double Eagle Petroleum Co. (NASDAQ:DBLE) and Gasco Energy Inc. (GSX), combined. Kodiak Oil & Gas is definitely a stock to pay attention to, and if bought now could potentially bring in huge earnings in the future.
Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.