Oil and gas stocks are garnering significant attention from investors around the world. The Colonial pipeline hack has ramped up oil demand and prices. The return to societal and economic normalcy certainly bodes well for the stock prices of publicly traded oil and gas companies.
As long as demand for oil and gas continues to rise as life returns to normal, the industry’s top players stand to benefit. Even if sales of electric vehicles skyrocket in the years ahead, it will take more than a decade for the majority of the world’s drivers to hang up the gas pump for good in favor of rechargeable batteries. In other words, the oil and gas industry might have an epic dead cat bounce in the year ahead.
If you are like most investors, you are not exactly sure which oil and gas stocks are deserving of your hard-earned investing dollars. Fret not, as I have identified two of the most intriguing stocks in this segment: EOG Resources (EOG) and Occidental Petroleum Corporation (OXY).
EOG Resources (EOG)
EOG explores for and produces both oil and gas. EOG operations are located in the United States, China, and the little-known Trinidad. EOG evaluates potential well profitability with the overarching goal of churning out oil and gas at a volume that offsets operation costs.
EOG has an overall grade of B, which translates into a Buy rating in the POWR Ratings system. The company has a Momentum Grade of A and a grade of B in the Quality, Sentiment, and Growth components. Investors who are curious as to how EOG grades out in the Value and Stability components can find out by clicking here.
Of the 93 publicly traded companies in the Energy – Oil & Gas industry, EOG is ranked 19th. You can find out more about the stocks in the Energy – Oil & Gas sector by clicking here. EOG has a forward P/E ratio of 13.64, indicating it is likely undervalued at its current price of $79.91. However, EOG’s beta of 2.17 is pretty high, so the stock is likely to be somewhat volatile when inevitable market undulations occur in the months ahead.
If EOG performs in accordance with the top analysts’ expectations, the stock could move up to $87.94 per share, indicating a potential 10% upside. The highest analyst target price for the stock is $109. Five analysts rate the stock a Strong Buy, and seventeen rate it a Buy.
Occidental Petroleum Corporation (OXY)
OXY has been in business for an entire century. Based in Houston, TX, the company produces both oil and gas along with specialty chemicals, basic chemicals, petrochemicals, and polymers. OXY’s reserves are 50% oil, 28% gas, and 22% NGL.
OXY has an overall grade of C, translating into a Neutral rating in the POWR Ratings system. The company has a Quality Grade of C, and a Value Grade of C. Click here to find out more about how OXY fares in the Growth, Momentum, Stability, and Sentiment components. Out of 93 publicly traded companies in the Energy – Oil & Gas industry, OXY is ranked 59th.
The analysts’ average price target for OXY is $30.48, indicating a potential 21% upside. It is interesting to note that of 23 analysts who cover the stock, sixteen rate it a Hold. OXY’s beta of 2.44 is also concerning.
Which is the Better Buy?
EOG is the winner of these two. EOG has a better overall rating in the POWR Ratings, superior components grades, and a higher industry rank.
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EOG shares were trading at $80.28 per share on Friday morning, down $0.05 (-0.06%). Year-to-date, EOG has gained 62.89%, versus a 12.87% rise in the benchmark S&P 500 index during the same period.
About the Author: Patrick Ryan
Patrick Ryan has more than a dozen years of investing experience with a focus on information technology, consumer and entertainment sectors. In addition to working for StockNews, Patrick has also written for Wealth Authority and Fallon Wealth Management. More...
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