As Russia’s invasion of Ukraine continues, the European Union agreed late on Monday to ban 90% of Russian crude imports by the end of the year, sending oil prices higher.
The embargo is part of the EU’s sixth sanctions package on Russia since it began its assault on Ukraine in February.
On Tuesday morning, West Texas Intermediate crude futures were up 2.88% at $117.95, while International Brent crude futures rose 2.03% to $123.70.
The energy sector as a whole has also done well so far in 2022, having climbed 37.99%.
Based on these trends, the GuruFocus Aggregated Portfolio, a Premium feature based on 13F filings as of the end of first-quarter 2022, found oil and gas companies that are popular with gurus include Exxon Mobil Corp. (XOM, Financial), Chevron Corp. (CVX, Financial), ConcocoPhillips (COP, Financial), Schlumberger Ltd. (SLB, Financial) and Pioneer Natural Resources Co. (PXD, Financial).
Exxon Mobil
Holding a combined equity portfolio weight of 12.81%, 22 gurus have positions in Exxon Mobil (XOM, Financial).
The Irving, Texas-based integrated oil and gas giant has a $418.21 billion market cap; its shares were trading around $98.97 on Tuesday with a price-earnings ratio of 16.41, a price-book ratio of 2.46 and a price-sales ratio of 1.39.
The GF Value Line suggests the stock is modestly overvalued currently based on historical ratios, past financial performance and future earnings projections.
The GF Score of 77 out of 100 indicates the company is likely to have average performance going forward. The company received high marks for profitability and financial strength, but recorded middling grades for growth, GF Value and momentum.
Exxon Mobil’s financial strength and profitability were both rated 7 out of 10 by GuruFocus. In addition to a comfortable level of interest coverage, the Altman Z-Score of 4.17 indicates the company is in good standing. The return on invested capital, however, is overshadowed by the weighted average cost of capital, meaning the company is struggling to create value as it grows.
The company is being supported by margins and returns on equity, assets and capital that top over half of its competitors. Exxon Mobil also has a high Piotroski F-Score of 9 out of 9, meaning business conditions are healthy, and a predictability rank of one out of five stars. According to GuruFocus research, companies with this rank return an average of 1.1% annually over a 10-year period.
Of the gurus invested in Exxon Mobil, First Eagle Investment (Trades, Portfolio) has the largest stake with 0.56% of its outstanding shares. Jim Simons (Trades, Portfolio)’ Renaissance Technologies, Richard Pzena (Trades, Portfolio), the T Rowe Price Equity Income Fund (Trades, Portfolio), Ken Fisher (Trades, Portfolio), Ray Dalio (Trades, Portfolio) and John Paulson (Trades, Portfolio) also have sizeable positions in the stock.
Chevron
With a combined portfolio weight of 24.44%, 22 gurus are invested in Chevron (CVX, Financial).
The oil and gas producer headquartered in San Ramon, California has a market cap of $352.29 billion; its shares were trading around $179.10 on Tuesday with a price-earnings ratio of 16.86, a price-book ratio of 2.42 and a price-sales ratio of 1.94.
According to the GF Value Line, the stock is modestly overvalued currently.
The GF Score of 76 suggests the company is likely to have average performance going forward. The company recorded high grades for financial strength and profitability, but momentum, GF Value and growth saw middling ranks.
GuruFocus rated Chevron’s financial strength 8 out of 10, driven by adequate interest coverage and a high Altman Z-Score of 4.17. The ROIC is being eclipsed by the WACC, however, meaning the company is struggling to create value.
The company’s profitability scored a 7 out of 10 rating. In addition to strong margins and returns that outperform a majority of industry peers, Chevron has a high Piotroski F-Score of 8 and a one-star predictability rank.
With an 8.10% stake, Warren Buffett (Trades, Portfolio) is Chevron’s largest guru shareholder. Other top guru investors include Fisher, the Smead Value Fund (Trades, Portfolio), Stanley Druckenmiller (Trades, Portfolio), Simons’ firm, Charles Brandes (Trades, Portfolio) and Dalio.
ConocoPhillips
A total of 21 gurus have a position in ConocoPhillips (COP, Financial), carrying a combined equity portfolio weight of 22.17%.
The Houston-based oil and gas producer has a $151.07 billion market cap; its shares were trading around $116.98 on Tuesday with a price-earnings ratio of 12.04, a price-book ratio of 3.06 and a price-sales ratio of 2.87.
Based on the GF Value Line, the stock appears to be significantly overvalued currently.
The GF Score of 80 implies average performance potential, driven by high points for profitability, growth and financial strength, a middling grade for momentum and a low rank for GF Value.
ConocoPhillips’ financial strength and profitability were both rated 7 out of 10 by GuruFocus. In addition to sufficient interest coverage, the Altman Z-Score of 4.06 indicates the company is in good standing. The ROIC also exceeds the WACC, indicating value creation is occurring.
The company’s margins and returns are outperforming versus competitors. ConocoPhillips also has a high Piotroski F-Score of 7 and a one-star predictability rank.
Dodge & Cox is the largest guru shareholder of ConocoPhillips with a 1.63% stake. Additional gurus with significant holdings are Diamond Hill Capital (Trades, Portfolio), Fisher, Bill Nygren (Trades, Portfolio), Smead, Steven Cohen (Trades, Portfolio) and Elfun Trusts (Trades, Portfolio).
Schlumberger
Twenty-one gurus have positions in Schlumberger (SLB, Financial), representing a combined portfolio weight of 19.94%.
The oilfield services company, which is headquartered in Houston, has a market cap of $26.9 billion; its shares were trading around $19.53 on Friday with a price-book ratio of 2.23 and a price-sales ratio of 0.91.
The GF Value Line suggests the stock is significantly overvalued currently.
The GF Score of 58 also indicates the company has poor future performance potential based on middling grades for profitability, financial strength and momentum as well as low ranks for growth and GF Value.
GuruFocus rated Schlumberger’s financial strength 5 out of 10. Despite having sufficient interest coverage, the Altman Z-Score of 2.72 indicates the company is under some pressure since revenue per share has declined in recent years. The WACC also surpasses the ROIC, so the company is struggling to create value.
The company scored a rating of 6 out of 10 for profitability, driven by operating margin expansion, strong returns that top a majority of industry peers and a high Piotroski F-Score of 7. Schlumberger also has a one-star predictability rank.
Of the gurus invested in Schlumberger, Dodge & Cox has the largest stake with 2.17% of its outstanding shares. First Eagle, Fisher, Hotchkis & Wiley and Simons’ firm also have notable positions.
Pioneer Natural Resources
With a combined portfolio weight of 16.04%, 16 gurus are invested in Pioneer Natural Resources (PXD, Financial).
The Irving, Texas-based oil and gas producer has a $67.37 billion market cap; its shares were trading around $278.49 on Tuesday with a price-earnings ratio of 16.93, a price-book ratio of 2.84 and a price-sales ratio of 3.39.
According to the GF Value Line, the stock is significantly overvalued.
The GF Score of 86 suggests the company has good outperformance potential based on high marks for profitability, growth and financial strength, a middling rank for momentum and a low grade for GF Value.
Pioneer’s financial strength and profitability were both rated 8 out of 10 by GuruFocus. In addition to a comfortable level of interest coverage, the Altman Z-Score of 4.41 indicates the company is in good standing. Value is also being created since the ROIC is higher than the WACC.
The company is supported by strong margins and returns that are outperforming versus competitors, as well as a high Piotroski F-Score of 8. Pioneer also has a one-star predictability rank.
PRIMECAP Management (Trades, Portfolio) is the company’s largest guru shareholder with a 2.15% stake. Other top guru investors include Barrow, Hanley, Mewhinney & Strauss, Cohen, Leon Cooperman (Trades, Portfolio), Arnold Van Den Berg (Trades, Portfolio), Druckenmiller and Fisher.
Additional popular picks
Additional energy companies that were broadly held by gurus as of the first quarter included APA Corp. (APA, Financial), Occidental Petroleum Corp. (OXY, Financial), Halliburton Co. (HAL, Financial), EOG Resources Inc. (EOG, Financial) and Shell PLC (SHEL, Financial).
