The past 12 months have been tough for stocks in general, but the energy sector in particular has been hit hard. Over the past year, the Standard & Poor’s 500 index is off about 5.5 percent while the S&P Energy index is down nearly 21 percent.
However, strong growth out of the U.S. and the prospect for a multi-nation agreement on crude production targets have led to a strong rebound in energy-related names over the past four weeks. In fact, the U.S. Energy sector had the strongest one-month performance of any sector, up 4.3 percent.
The screen. We used the Recognia Strategy Builder to search for large-cap U.S. energy stocks in that have low debt, bullish analyst ratings and strong stock performance over the past month. We began by setting a minimum threshold on market capitalization of $10 billion. This ensures we are focusing on the largest and most stable companies in the U.S. market.
Next, to find strong performers in the context of today’s market, we filtered on U.S. energy companies whose stock prices are up by at least 5 percent over the past four weeks. We also added a filter for debt-to-equity ratio. In the past year, many energy companies took on significant debt as a result of the rapidly falling price of crude. To ensure we don’t select companies with an onerous debt burden, we selected only companies with a debt-to-equity ratio of 1 or less.
Finally, we turned to analyst ratings to further refine our list by selecting only stocks with consensus ratings of “buy” or “strong buy.”
Suncor Energy (ticker: SU). Suncor tops our list with a market cap of $40.6 billion and a four-week price performance of 23 percent. Suncor is a Canadian integrated oil company focusing on extracting synthetic crude oil from the Alberta oil sands. On Feb. 4, the company announced it had acquired 72.9 percent of Canadian Oil Sands shares, thereby making its long-running acquisition attempt successful. Suncor pays a 3.3 pecent dividend and has a long track record of raising dividends over time.
Valero Energy Corp. (VLO). San Antonio-based Valero Energy is another U.S. energy stock which has been on a strong run for the past four weeks. The company owns and operates 16 refineries in the U.S., U.K. and the Caribbean. On Jan. 28, Valero issued fourth-quarter and full-year results that beat estimates significantly for both revenue and earnings. The stock went on hit a new 52-week low on Feb. 8, but has since climbed strongly, up 18 percent in the past month.
Marathon Petroleum Corp. (MPC). Marathon is a U.S.-based refining, marketing and transportation company headquartered in Findlay, Ohio. The company operates seven refineries across the U.S. Investors in Marathon have been rewarded with a 17 percent increase in stock price over the past month. The stock also pays a 3.3 percent dividend and has a strong track record of dividend increases. Marathon, like other U.S. oil refiners, has benefited from analyst upgrades on the sector from several research firms.
Hess Corp. (HES). Hess is one of the smallest companies on our list, with a market cap of $14.8 billion. However, the company has recorded one of the strongest price performance stats — up 34 percent in the past four weeks. Since hitting an all-time high in August 2014, Hess stock fell 65 percent to its 52-week low on Jan. 25. Just days later, S&P downgraded to company’s debt by one notch. This news did little to suppress investor optimism in the company, which has gone on to rally over 40 percent from its low.
Noble Energy (NBL). Noble Energy is an independent oil and gas exploration company with operations in the U.S., Africa and the Eastern Mediterranean. On Feb. 17, the company reported fourth-quarter results that missed on revenue but surpassed estimates for earnings by a wide margin. The improved earnings were mainly the result of expense reductions that has driven investor interest in the stock. The stock price is up 14 percent in the past four weeks.
The investment ideas presented here are for information only. They do not constitute advice or a recommendation by Recognia Inc. in respect of the investment in financial instruments. Investors should conduct further research before investing.
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5 Rebounding U.S. Energy Stocks originally appeared on usnews.com
