I recommend oil and gas stocks play a part in a well-diversified portfolio. There are many oil and gas companies and they cover a wide range of risk, and a wide range of types, from income stocks to growth stocks. Some of these companies will benefit in the near term from recent rises in their respective commodity prices. The companies that focus mainly on refining may suffer in the near term (higher input costs), but will benefit in the longer term as demand for their final products increases (economic recovery). In this article, I examine five prominent oil and gas companies that are benefiting from positive drivers like key geographic location, strong previous quarter earnings, and strong assets. I will uncover any investment opportunities and recommend them for a well-balanced portfolio.
HollyFrontier Corporation (HFC, Financial): HollyFrontier Corporation has been range bound between $21 and $39 per share over the past year and the stock is presently trading in the top quartile of the range. It is also coming off its 52 week low of $21.13 per share it reached in December on strong momentum. In addition to this capital appreciation the company also pays out a dividend of $.40 per share that brings about a dividend yield of 1.2% at the stock's current price. This dividend is paid out on a consistent basis but has varied lately. The payout ratio on the stock is 16% which is lower than the industry average of 25% and lower than the company's nearest competitor ExxonMobil Corp (XMO)'s payout ratio of 22%. So the dividend is stable at this time and has room to be raised in my opinion. HollyFrontier Corporation is based out of Dallas, Texas and was established there in 1947. The company is the product of a merger between Holly Corporation and Frontier Oil Corporation that occurred in June of 2011. In my opinion, the combined company will improve its ability to compete against larger companies that are entering the refining market. Furthermore, the wide spread geographical locations of the refineries will insulate the company from environmental legislation in any one general area. HollyFrontier's refinery locations are in Tulsa, Okla.; El Dorado, Kansas; Artesia, New Mexico; Woods Cross, Utah and Cheyenne, Wy.
Contango Oil & Gas Company (MCF): Contango Oil & Gas Company has been range bound between $51 and $70 per share over the past year and the stock is presently trading in the top quartile of that range. Two of the company's closest competitors in the industry are BP Plc (BP) and Newfield Exploration Co. (NFX). BP has a trailing twelve month earnings per share of $8.06 and Newfield Exploration Co. has a trailing twelve month earnings per share of $3.66. Although the company is small by comparison, its trailing twelve month earnings per share of $4.41 are quite respectable in my opinion. Furthermore, in the company's latest earnings report it beat analysts' estimates across the board for the second quarter in a row. Contango Oil & Gas Company is headquartered in Houston, Texas and was established there in 1986. The company is involved in the exploration, development, production and acquisition of oil and natural gas assets which are primarily located offshore in the Gulf of Mexico and at water depths of less than 300 feet. Contango Oil & Gas Company also purchases working interests in the Gulf of Mexico in the form of offshore exploration and development prospects.
Range Resources (RRC, Financial): Range Resources has been range bound between $46 and $78 per share over the past year and the stock is presently trading in the middle of that range. The stock has risen over $10 per share since the first of the year and is currently trading at $65.72 per share. In addition to this capital appreciation the company also pays out a dividend of $.16 per share that brings in a dividend yield of .2% at the stock's current price. This dividend is paid out on a consistent basis. However, the company is operating at a loss at this time and does not generate a payout ratio. Two of the company's closest competitors in the industry are Chesapeake Energy Corporation (CHK) and Exxon Mobil Corporation (XOM). Chesapeake Energy Corporation has a trailing twelve month earnings per share of $1.99 and Exxon Mobil Corporation has a trailing twelve month earnings per share of $8.42. Range Resources has a trailing twelve month earnings per share of -1.63 but this may change in the near term, in my opinion, with the rise in natural gas and oil prices. Range Resources is involved in the exploration, development and acquisition of natural gas and oil resources primarily in the Appalachian and Southwestern regions of the United States.
Ultra Petroleum (UPL, Financial): Ultra Petroleum is in a well established downward trend over the past year that has taken it from the $52 level down to the $22 range it is in today. It has been said that when you pick bottoms you get stinky fingers but this stock may be worth picking, in my opinion, especially when you compare it to its peers. Two of the company's closest competitors in the industry are Cabot Oil & Gas Corporation (COG, Financial) and EOG Resources Inc. (EOG): Cabot Oil & Gas Corporation has a trailing twelve month earnings per share of $.69 and EOG Resources, Inc. has a trailing twelve month earnings per share of $3.90. Ultra Petroleum's trailing twelve month earnings per share is actually better than average, by comparison, coming in at $2.32. Ultra Petroleum is headquartered in Houston, Texas and was incorporated in 1979. The company is involved with the exploration, development and acquisition of natural gas and oil resources in the United States. Ultra Petroleum has operations in the Green River Basin in southwest Wyoming and the Appalachian Basin in north-central Pennsylvania. I think the stock is way oversold at this point and a turnaround is eminent in the near term.
Cabot Oil & Gas Corporation: Cabot Oil & Gas Corporation has been in a well established upward trend over the past year and is presently trading below its mean price of $40 per share. In addition to this capital appreciation the company also pays out a dividend of $.04 per share that amounts to a dividend yield of 0.1% at the stock's current price. This dividend is paid out on a consistent basis and has been raised for the first time in four years this quarter. The payout ratio on the stock is 9% which is much lower than the industry average of 26%. Two of the company's closest competitors in the industry are Anadarko Petroleum Corporation (APC) and Chevron Corporation (CVX). Anadarko Petroleum Corporation has a trailing twelve month earnings per share of -$5.32 and Chevron Corporation has a trailing twelve month earnings per share of $13.44. Cabot Oil & Gas Corporation's trailing twelve month earnings per share of $0.69 is not much by comparison but I think, if you take into account the dividend raise, things may be looking better inside the company. The recent rise in natural gas prices also bodes well for the company, in my opinion.
HollyFrontier Corporation (HFC, Financial): HollyFrontier Corporation has been range bound between $21 and $39 per share over the past year and the stock is presently trading in the top quartile of the range. It is also coming off its 52 week low of $21.13 per share it reached in December on strong momentum. In addition to this capital appreciation the company also pays out a dividend of $.40 per share that brings about a dividend yield of 1.2% at the stock's current price. This dividend is paid out on a consistent basis but has varied lately. The payout ratio on the stock is 16% which is lower than the industry average of 25% and lower than the company's nearest competitor ExxonMobil Corp (XMO)'s payout ratio of 22%. So the dividend is stable at this time and has room to be raised in my opinion. HollyFrontier Corporation is based out of Dallas, Texas and was established there in 1947. The company is the product of a merger between Holly Corporation and Frontier Oil Corporation that occurred in June of 2011. In my opinion, the combined company will improve its ability to compete against larger companies that are entering the refining market. Furthermore, the wide spread geographical locations of the refineries will insulate the company from environmental legislation in any one general area. HollyFrontier's refinery locations are in Tulsa, Okla.; El Dorado, Kansas; Artesia, New Mexico; Woods Cross, Utah and Cheyenne, Wy.
Contango Oil & Gas Company (MCF): Contango Oil & Gas Company has been range bound between $51 and $70 per share over the past year and the stock is presently trading in the top quartile of that range. Two of the company's closest competitors in the industry are BP Plc (BP) and Newfield Exploration Co. (NFX). BP has a trailing twelve month earnings per share of $8.06 and Newfield Exploration Co. has a trailing twelve month earnings per share of $3.66. Although the company is small by comparison, its trailing twelve month earnings per share of $4.41 are quite respectable in my opinion. Furthermore, in the company's latest earnings report it beat analysts' estimates across the board for the second quarter in a row. Contango Oil & Gas Company is headquartered in Houston, Texas and was established there in 1986. The company is involved in the exploration, development, production and acquisition of oil and natural gas assets which are primarily located offshore in the Gulf of Mexico and at water depths of less than 300 feet. Contango Oil & Gas Company also purchases working interests in the Gulf of Mexico in the form of offshore exploration and development prospects.
Range Resources (RRC, Financial): Range Resources has been range bound between $46 and $78 per share over the past year and the stock is presently trading in the middle of that range. The stock has risen over $10 per share since the first of the year and is currently trading at $65.72 per share. In addition to this capital appreciation the company also pays out a dividend of $.16 per share that brings in a dividend yield of .2% at the stock's current price. This dividend is paid out on a consistent basis. However, the company is operating at a loss at this time and does not generate a payout ratio. Two of the company's closest competitors in the industry are Chesapeake Energy Corporation (CHK) and Exxon Mobil Corporation (XOM). Chesapeake Energy Corporation has a trailing twelve month earnings per share of $1.99 and Exxon Mobil Corporation has a trailing twelve month earnings per share of $8.42. Range Resources has a trailing twelve month earnings per share of -1.63 but this may change in the near term, in my opinion, with the rise in natural gas and oil prices. Range Resources is involved in the exploration, development and acquisition of natural gas and oil resources primarily in the Appalachian and Southwestern regions of the United States.
Ultra Petroleum (UPL, Financial): Ultra Petroleum is in a well established downward trend over the past year that has taken it from the $52 level down to the $22 range it is in today. It has been said that when you pick bottoms you get stinky fingers but this stock may be worth picking, in my opinion, especially when you compare it to its peers. Two of the company's closest competitors in the industry are Cabot Oil & Gas Corporation (COG, Financial) and EOG Resources Inc. (EOG): Cabot Oil & Gas Corporation has a trailing twelve month earnings per share of $.69 and EOG Resources, Inc. has a trailing twelve month earnings per share of $3.90. Ultra Petroleum's trailing twelve month earnings per share is actually better than average, by comparison, coming in at $2.32. Ultra Petroleum is headquartered in Houston, Texas and was incorporated in 1979. The company is involved with the exploration, development and acquisition of natural gas and oil resources in the United States. Ultra Petroleum has operations in the Green River Basin in southwest Wyoming and the Appalachian Basin in north-central Pennsylvania. I think the stock is way oversold at this point and a turnaround is eminent in the near term.
Cabot Oil & Gas Corporation: Cabot Oil & Gas Corporation has been in a well established upward trend over the past year and is presently trading below its mean price of $40 per share. In addition to this capital appreciation the company also pays out a dividend of $.04 per share that amounts to a dividend yield of 0.1% at the stock's current price. This dividend is paid out on a consistent basis and has been raised for the first time in four years this quarter. The payout ratio on the stock is 9% which is much lower than the industry average of 26%. Two of the company's closest competitors in the industry are Anadarko Petroleum Corporation (APC) and Chevron Corporation (CVX). Anadarko Petroleum Corporation has a trailing twelve month earnings per share of -$5.32 and Chevron Corporation has a trailing twelve month earnings per share of $13.44. Cabot Oil & Gas Corporation's trailing twelve month earnings per share of $0.69 is not much by comparison but I think, if you take into account the dividend raise, things may be looking better inside the company. The recent rise in natural gas prices also bodes well for the company, in my opinion.
