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Oil prices are currently on the rise following a wider-than-expected fall in domestic crude inventories that made way for a nice weekly gain. However, the commodity might end the week on a slightly bearish note. This is owing to news trickling in of OPEC production reaching a record high in June alongside a rebound in production in Canada and Nigeria.
However, an overall weekly gain is expected from production disruption in Norway and Venezuela. Also, the U.S. Energy Information Administration (EIA) reported that U.S. commercial crude oil inventories fell by 4.1 million barrels to 526.6 million for the week ended Jun 24, marking the sixth straight weekly decline. This was wider than analysts’ forecast of a decrease of 2.4 million barrels.
The bullish case for oil was ably supported by Norwegian oil workers’ strikes affecting output. Also, refiners and oil producers in Venezuela struggled to maintain production following equipment shortages and power interruptions.
In addition to the above, investors' hopes were rekindled on oil and the commodity after the surprise Brexit decision. Both West Texas Intermediate (WTI) and Brent crude surged over the past fortnight by 7.9% and 7.3%, respectively.
The Road Ahead for Crude
The current change in demand-supply dynamics put energy players on investors’ radar after waiting long for a lift in the fortunes of the space. So long, the sector was ravaged by falling realizations from upstream operations which dragged down the overall picture. Now, investors can only hope that the decline in the production level does not end up being a mirage. Looking forward, EIA also expects strong growth in global consumption of petroleum and other liquid fuels in 2016. Per the agency, daily demand is expected to rise by 1.5 million barrels in 2016.
Thus we expect upstream stocks to perform well in a period of rising oil prices as investors chase stocks with leverage to oil plays.
Buy Stocks on the Move
Today, we have screened stocks that are presently trading near their 52-week highs and look ready to break out and chart new year-long highs. Moreover, in this brave new era when investing fundamentals have become quaint back-seat notions, our stocks boast impressive fundamental metrics and a solid Zacks Rank.
Granted, “old-school” investors may be wary of getting into such stocks, citing high valuation and limited upside. However, at times, a strong price uptrend implies robust demand for a stock, which is often backed by either good earnings performance or impressive growth metrics or both.
4 Top Picks
A number of energy stocks saw their prices head north along with an uptrend in the price of commodities they deal with. Below with the help of our Zacks Stock Screener, we highlight four such energy stocks that are now gaining.
Canadian Natural Resources Limited (CNQ - Free Report) : Canadian Natural Resources Limited is an independent oil and natural gas exploration, development and production company based in Calgary, Alberta. The company's operations are focused on Western Canada, the North Sea and Offshore West Africa. It has a five-year average ROE of 8.78%. The company’s estimated EPS growth for the current year is pegged at 44.6%, higher than the industry average of 16.2%. The company closed at $30.89 yesterday, near its 52-week high price of $32.02.
Continental Resources, Inc. : Oklahoma City-based Continental is an independent exploration and production company. It is the largest leaseholder and one of the largest producers in the domestic oil space, the Bakken play of North Dakota and Montana. It has a five-year average ROE of 20.05%. It has an estimated EPS growth for the next year at 93.3%, higher than the industry average of 23.9%. The company closed at $45.82 yesterday, close to its 52-week high price of $46.01.
Rice Energy Inc. : Canonsburg, PA-based Rice Energy is an independent oil and natural gas company, which is engaged in the acquisition, exploration, and development of natural gas, oil, and natural gas liquid (NGL) properties in the Appalachian Basin. It has a five-year average ROE of 3.33%. The company closed at $22.75 yesterday, near its 52-week high price of $23.57.
Chevron Corporation (CVX - Free Report) : San Ramon, CA-based Chevron is engaged in oil and gas exploration and production, refining and marketing of petroleum products, manufacturing of chemicals, and other energy-related businesses. It has a five-year average ROE of 14.68%. Currently, the company’s estimated EPS growth for the next year is pegged at 269.0%, higher than the industry average of 27.8%. The company closed at its 52-week high of $105.00 yesterday.
Bottom Line
Amid the widespread uncertainty plaguing the investment space, it would be rather foolish to spend money on stocks that witnessed a hike out of sheer fluke. Instead, go for stocks like those mentioned above, which are currently hitting their highs and possess strong fundamentals. These are perfectly safe avenues for investment.
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4 Oil Stocks That Are Back Near 52-Week Highs
Oil prices are currently on the rise following a wider-than-expected fall in domestic crude inventories that made way for a nice weekly gain. However, the commodity might end the week on a slightly bearish note. This is owing to news trickling in of OPEC production reaching a record high in June alongside a rebound in production in Canada and Nigeria.
However, an overall weekly gain is expected from production disruption in Norway and Venezuela. Also, the U.S. Energy Information Administration (EIA) reported that U.S. commercial crude oil inventories fell by 4.1 million barrels to 526.6 million for the week ended Jun 24, marking the sixth straight weekly decline. This was wider than analysts’ forecast of a decrease of 2.4 million barrels.
The bullish case for oil was ably supported by Norwegian oil workers’ strikes affecting output. Also, refiners and oil producers in Venezuela struggled to maintain production following equipment shortages and power interruptions.
In addition to the above, investors' hopes were rekindled on oil and the commodity after the surprise Brexit decision. Both West Texas Intermediate (WTI) and Brent crude surged over the past fortnight by 7.9% and 7.3%, respectively.
The Road Ahead for Crude
The current change in demand-supply dynamics put energy players on investors’ radar after waiting long for a lift in the fortunes of the space. So long, the sector was ravaged by falling realizations from upstream operations which dragged down the overall picture. Now, investors can only hope that the decline in the production level does not end up being a mirage. Looking forward, EIA also expects strong growth in global consumption of petroleum and other liquid fuels in 2016. Per the agency, daily demand is expected to rise by 1.5 million barrels in 2016.
Thus we expect upstream stocks to perform well in a period of rising oil prices as investors chase stocks with leverage to oil plays.
Buy Stocks on the Move
Today, we have screened stocks that are presently trading near their 52-week highs and look ready to break out and chart new year-long highs. Moreover, in this brave new era when investing fundamentals have become quaint back-seat notions, our stocks boast impressive fundamental metrics and a solid Zacks Rank.
Granted, “old-school” investors may be wary of getting into such stocks, citing high valuation and limited upside. However, at times, a strong price uptrend implies robust demand for a stock, which is often backed by either good earnings performance or impressive growth metrics or both.
4 Top Picks
A number of energy stocks saw their prices head north along with an uptrend in the price of commodities they deal with. Below with the help of our Zacks Stock Screener, we highlight four such energy stocks that are now gaining.
Canadian Natural Resources Limited (CNQ - Free Report) : Canadian Natural Resources Limited is an independent oil and natural gas exploration, development and production company based in Calgary, Alberta. The company's operations are focused on Western Canada, the North Sea and Offshore West Africa. It has a five-year average ROE of 8.78%. The company’s estimated EPS growth for the current year is pegged at 44.6%, higher than the industry average of 16.2%. The company closed at $30.89 yesterday, near its 52-week high price of $32.02.
Continental Resources, Inc. : Oklahoma City-based Continental is an independent exploration and production company. It is the largest leaseholder and one of the largest producers in the domestic oil space, the Bakken play of North Dakota and Montana. It has a five-year average ROE of 20.05%. It has an estimated EPS growth for the next year at 93.3%, higher than the industry average of 23.9%. The company closed at $45.82 yesterday, close to its 52-week high price of $46.01.
Rice Energy Inc. : Canonsburg, PA-based Rice Energy is an independent oil and natural gas company, which is engaged in the acquisition, exploration, and development of natural gas, oil, and natural gas liquid (NGL) properties in the Appalachian Basin. It has a five-year average ROE of 3.33%. The company closed at $22.75 yesterday, near its 52-week high price of $23.57.
Chevron Corporation (CVX - Free Report) : San Ramon, CA-based Chevron is engaged in oil and gas exploration and production, refining and marketing of petroleum products, manufacturing of chemicals, and other energy-related businesses. It has a five-year average ROE of 14.68%. Currently, the company’s estimated EPS growth for the next year is pegged at 269.0%, higher than the industry average of 27.8%. The company closed at its 52-week high of $105.00 yesterday.
Bottom Line
Amid the widespread uncertainty plaguing the investment space, it would be rather foolish to spend money on stocks that witnessed a hike out of sheer fluke. Instead, go for stocks like those mentioned above, which are currently hitting their highs and possess strong fundamentals. These are perfectly safe avenues for investment.
Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days.Click to get this free report >>