In light of increasing crude oil prices and Treasury yields pressuring technology shares, four energy stocks with high financial strength and trading at fair GF Values are Dril-Quip Inc. (DRQ, Financial), REX American Resources Corp. (REX, Financial), Evolution Petroleum Corp. (EPM, Financial) and Natural Gas Services Group Inc. (NGS, Financial) according to the All-in-One Screener, a Premium feature of GuruFocus.
U.S. markets tumble as increasing yields weigh on technology shares
On Tuesday, the Dow Jones Industrial Average closed at 34,299.53, down 569.84 points from Monday’s close of 34,869.37. Likewise, the Nasdaq Composite Index closed at 14,546.68, down 423.29 points or 2.83% from the previous close of 14,969.97.
Tech shares tumbled as the 10-year and 30-year Treasury constant maturity rates climbed close to three-month highs as investors monitored the Federal Reserve’s announcement that it will soon taper bond purchases.
Crude oil prices near three-year high
Sanctuary Wealth Chief Investment Officer Jeff Kilburg said in a note that the “selling pressure” in technology shares follows a pattern from last year, in which increasing interest rates led to the “reflation and rotation trade” away from technology stocks.”
West Texas Intermediate crude prices topped $70 on Sept. 20, close to the three-year high of approximately $75 in October 2018.
As such, investors may find opportunities in energy stocks with high financial strength and are trading at a fair GF Value. Based on Peter Lynch’s earnings line concept, GuruFocus’ exclusive valuation method considers a company’s historical price multiples and adjusts for past performance and future growth estimates.
Dril-Quip
Shares of Dril-Quip (DRQ, Financial) traded around $24.85, showing the stock is modestly undervalued based on Tuesday’s price-to-GF Value ratio of 0.72.
GuruFocus ranks the Houston-based drilling equipment company’s financial strength 8 out of 10 on several positive investing signs, which include a strong Altman Z-score of 6.39 and cash-to-debt and debt-to-equity ratios outperforming more than 83% of global competitors.
Gurus with holdings in Dril-Quip include Ken Fisher (Trades, Portfolio)’s Fisher Investments and Mario Gabelli (Trades, Portfolio)’s GAMCO Investors Inc. (GBL, Financial).
REX American Resources
Shares of REX American Resources (REX, Financial) traded around $79.86, showing that the stock is modestly undervalued based on Tuesday’s price-to-GF Value ratio of 0.73.
GuruFocus ranks the Dayton, Ohio-based alternative energy and ethanol production company’s financial strength and profitability 7 out of 10 on several positive investing signs, which include a high Piotroski F-score of 8, a strong Altman Z-score of 9.35 and debt ratios that outperform more than 80% of global competitors.
Evolution Petroleum
Shares of Evolution Petroleum (EPM, Financial) traded around $5.65, showing the stock is fairly valued based on Tuesday’s price-to-GF Value ratio of 1.03.
GuruFocus ranks the Houston-based company’s financial strength 7 out of 10 on several positive investing signs, which include a strong Altman Z-score of 5.11 and interest coverage and debt ratios that outperform more than 75% of global competitors.
Natural Gas Services
Shares of Natural Gas Services (NGS, Financial) traded around $9.97, showing that the stock is fairly valued based on Tuesday’s price-to-GF Value ratio of 0.93.
GuruFocus ranks the Midland, Texas-based energy service company’s financial strength 7 out of 10 on the back of leverage ratios outperforming more than 83% of global competitors despite a moderately weak Altman Z-score of 2.39.
