In 2016, there were numerous oil stocks that took a beating as oil prices continued to be depressed. That said, towards the end of the year, the oil market experienced its first sense of relief in a long time. Why? Because OPEC decided to help relieve the oil glut that has been keeping oil prices down.
There were two OPEC agreements designed to limit output, and each gave oil the boost it needed to go over the $50-per-barrel mark. However, it has dropped since then and remains below the $50 mark. It’s fair to say that until companies can expect a reasonable return on investment, they will continue to hold back on production.
Here are 5 stocks that are meant to turn higher oil prices into profits. Keep in mind that all five companies have been accumulating assets that will produce income this year, and they are ready to expand if oil increases higher in the second half of 2017.
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EOG Resources Inc. (NYSE:$EOG)
Based in Texas, EOG Resources is unique in its approach to choosing drill sites. The company will search for premium sites that can produce a minimum 60% after-tax real rate of return when oil is at $50 per barrel or more. Even with oil below the $50 mark, EOG Resources says it can still be profitable. Instead of sitting back and complaining, the Texas-based company has used the period of depressed oil prices to unload itself of non-premium sites and focus on the acquisition of premium ones.
Since December 2016, EOG’s stock has been in a downward price channel. With that said, revenues have increased for the four quarters, which helped the company cut its income losses. It’s worth noting that EOG Resources’ last quarterly report illustrated positive incomes. It’s possible that the stock may have found a bottom at roughly $86 per share.
Did You Know?
- The average volume is 3,259,611
- The market capitalization is $53.034 billion
- The PE ratio (TTM) is -86.26
- The EPS (TTM) is -1.07
- The dividend and yield is 0.67 or 0.74%
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Comstock Resources Inc. (NYSE:$CRK)
Here we have another company based in Texas. Comstock Resources had two breaks last August and since its peak of nearly $13 per share last February, the company has been forming a base. If the stock completes the base, it could break out later in 2017. Quarterly reports for Comstock have suggested increased revenues and positive operating income.
On January 9, 2017, Comstock entered into a joint development venture with USG Properties Haynesville. As a result, the Frisco company now has access to an additional 3,315 acres that will bear 20 wells.
Did You Know?
- The average volume is 277,104
- The market capitalization is $106.38 million
- The PE ratio (TTM) is -0.87
- The EPS (TTM) is -7.92
- The dividend and yield is 0.00 or 0.00%
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Devon Energy Corp. (NYSE:$DVN)
Even though DVN has reported positive income in the past three quarters, this has not helped the stock. Since December of last year, the stock has been in a downward price channel. However, as the oil surplus is thought to end in late 2017, Devon has the potential to rise again, according to the Energy Information Administration.
So what are your options? You can either buy into the current downtrend or wait for it to breakout.
Did You Know?
- The average volume is 5,366,088
- The market capitalization is $16.64 billion
- The PE ratio (TTM) is 53.74
- The EPS (TTM) is 0.59
- The dividend and yield is 0.24 or 0.78%
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Enterprise Products Partners LP (NYSE:$EPD)
It’s worth noting that Enterprise Products Partners is not a driller, but rather a pipeline and storage company. It is less impressionable to the price of oil as it has paying contracts with companies for the transportation and storage of their oil. Additionally, the company runs export docks and exports liquefied petroleum gas.
In November of last year, the stock pulled out of a long downturn and increased until February of this year, when it started forming its current base.
Did You Know?
- The average volume is 4,580,363
- The market capitalization is $59.34 billion
- The PE ratio (TTM) is 22.44
- The EPS (TTM) is 1.24
- The dividend and yield is 1.68 or 6.15%
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Atwood Oceanics Inc. (NYSE:$ATW)
Remember when offshore drillers were hit hard by the downturn in oil prices? Well, Atwood Oceanics was apart of that. However, the increase in oil prices to just below $50 per barrel has positioned Atwood to service the needs of oil companies that want offshore rigs. Keep in mind that ATW drills worldwide.
ATW stock increased until February, but then decreased. It’s possible that it may have found a bottom at roughly $7 per share.
Did You Know?
- The average volume is 5,318,871
- The market capitalization is $632.88 million
- The PE ratio (TTM) is 6.35
- The EPS (TTM) is 1.24
- The dividend and yield is 0.00 or 0.00%
The Takeaway:
All in all, watch out for some of the smaller names in the energy industry. Why? Because these companies are in position to produce exceptional gains this year if oil prices rise above the $50 per barrel mark.
Featured Image: depositphotos/CoffeeMate
