Oil stocks are bursting and holding their gains, at least for now

The price of crude oil futures is back above 70. This, after falling below zero just over a year ago. You would think that with all the talk about renewables and electric vehicles, such a rebound like this is just on the other side of the miraculous. The market says oil is still in high demand.

The same is apparently true of oil stocks, in particular of the exploration and development type. If black gold is worth more, then those who bring it to the market are valued more. While the actions of crazy memes like GameStop and AMC get the most publicity, some energetic actions have reached new heights in 52 weeks.

Renewable energies are the future without a doubt, but it may take some time. Tesla’s stock has gone from 900 to 550 this year. Although Ford’s electric vehicle division is experiencing good growth, electric vehicle maker Lordstown Motors is issuing a “going concern warning” regarding its business outlook.

Either way, oil isn’t going anywhere anytime soon. Enough investors seem to believe that the next 3 to 5 years will be good for oil despite claims of its impending demise. Take a look at the highest peaks in the daily price charts of these 4 oil and gas stocks:

Callon Oil.

Look at this price chart: from 12.5 at the start of the year to its current 48. The New York Stock Exchange-listed oil company is enjoying an excellent year of earnings, much better than in the past five years. With a forward price-to-earnings ratio of 4.75, it’s a concern that Calon has more long-term debt on the books than equity.

This high short float of 21.5% means there’s a possibility that a decent short squeeze could send the stock even higher. Since market participants seem to be in a short mood, this is something to consider. No dividend is paid.

Cenovus Energy.

This one shows a movement quite similar to the Calun Petroleum price chart. Cenovus has gone from 3.25 in November 2020 to 9.84 this week. This integrated, Canada-based oil and gas company has negative earnings for the year. Analysts expect this to improve now that demand has improved. The forward p / e stands at 9.6 and the stock is trading roughly at its book value. Equity is exceeded by long-term debt. Investors receive a dividend of 0.30%.

Schlumberger.

The large oil equipment and services company is on the rise from November 14 to 35 today. Profits are in the red for the year but analysts expect a solid improvement. The forward weight is 22.4. Schlumberger is another oil company with more long-term debt than equity. The dividend yield is 1.39%. Goldman initiated a buy on the stock last month.

The SPDR Energy Select Sector ETF.

It is the primary exchange traded fund that represents all the key components of oil stocks in the stock market. The Energy Select Sector SPDR shows a steady uptrend with higher highs appearing in early June. The ETF hasn’t seen a high volume spread like the one in early November, but the trend definitely remains upward.

Obviously, there is probably more going on here than just a “renewables versus oil” story. What is important is that for some reason the oil industry is still finding investors with money.

Statistics courtesy of FinViz.com.


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Felix J. Dixon