Every week, host and Zacks stock strategist, Tracey Ryniec, will be joined by guests to discuss the hottest investing topics in stocks, bonds and ETFs and how it impacts your life.
This week, Tracey is going solo to take a look at the energy stocks, specifically the big integrated oil companies and the large exploration and production companies.
Global Recovery = Higher Oil Demand?
In November, energy stocks had their second great month of 2020, second only to the big April rally off the March coronavirus lows.
WTI crude has retaken $45 on the coronavirus vaccine news and the hope that energy demand will pick up in 2021.
It is looking like brighter days for the industry are coming in the next few years.
But should investors be buying here?
5 Big Energy Companies: Should You Buy for 2021?
1. Chevron CVX made $6.27 in 2019, is expected to lose $0.03 in 2020, and is expected to bounce back by 2021 with earnings of $2.54. Shares jumped 25% in November but are still down 21% over the last 2 years. It is still paying that big dividend, currently yielding 5.7%. Is it on sale?
2. Exxon XOM recently announced a cut in its CAPEX and another 15% global layoffs as it frees up cash to pay its dividend which is currently yielding 9.1%. Shares jumped 19% in November but remain down 51% over the last 2 years. A value or a trap?
3. Pioneer Natural Resources PXD has one of the best balance sheets of the E&Ps. It’s expected to still have positive earnings in 2020 and trades with a forward P/E of 63. With solid cash flows, it is buying Parsley Energy for $4.5 billion. And it’s still paying its dividend.
4. EOG Resources EOG has been raising its dividend the last several years and it still yields 2.9%, even with the pandemic. Shares were up 37.4% in November but remain down 54% over the last 2 years. Earnings are expected to double in 2021. Is it cheap right now?
5. ConocoPhillips COP is acquiring Concho Resources which will create an energy company with a $60 billion enterprise value. The deal is expected to close in the first quarter of 2021. Conoco is expected to lose $0.91 this year but earnings will rebound in 2021. The Zacks Consensus is looking for $0.55. It also pays an attractive dividend.
What else do you need to know about the oil stocks?
5 Stocks Set to Double
Each was hand-picked by a Zacks expert as the #1 favorite stock to gain +100% or more in 2020. Each comes from a different sector and has unique qualities and catalysts that could fuel exceptional growth.
Most of the stocks in this report are flying under Wall Street radar, which provides a great opportunity to get in on the ground floor.