Oil stocks worth buying

Oil stocks worth buying

Posted: hardwj Date of post: 24.05.2017

10 Best Oil and Gas Stocks for - Top Stocks - TheStreet Ratings

Founded in by brothers Tom and David Gardner, The Motley Fool helps millions of people attain financial freedom through our website, podcasts, books, newspaper column, radio show, and premium investing services.

That slump came despite OPEC's best efforts since producing nations have achieved fairly good compliance on their planned output cuts. PSX , and ConocoPhillips NYSE: COP , which should all do well in the current oil market. The total active rigs, according to Baker Hughes, has doubled since its low back in May of DistributionNOW -- or Now Inc. The past several quarters have been rather tough ones for anyone in this business, but DistriubtionNOW's management has performed admirably by right-sizing the business by significantly reducing headcount and closing or consolidating 99 facilities.

These have aided in preserving capital and allowed the company to remain free cash flow positive throughout the entire downturn.

Now that the North American market is picking back up again, we can reasonably estimate that it will have a profound impact on the bottom line.

After all, the U. It's also worth mentioning that DistributionNOW has completed four acquisitions in the U. These acquisitions and several competing companies going out of business have led to DistributionNOW gaining market share.

Access Denied

While the company's financials aren't looking that great lately -- distribution is a rather low margin business even when times are good -- it has more cash on hand than outstanding debt. Also, it has remained free cash flow positive despite the net income losses for eight straight quarters. Today, shares are trading at 0. By any measure, that is a cheap price to pay, especially when the industry is still emerging from a trough. Whenever I research energy companies -- or any stock with exposure to commodity prices -- I like to find ones which have either minimal exposure to commodity prices, or other factors in place that offset that risk.

As the past two-plus years have demonstrated, low oil and natural gas prices can destroy massive amounts of investor value. My search for companies well-positioned for almost any energy price environment often brings me back to Phillips This is in part because, while its refining segment is affected to some measure by oil prices, the company has demonstrated that it can make money in refining even when competitors struggle. This is in no small part due to the highly advanced capabilities of its refineries that give the company a lot of flexibility to process different kinds of crude oils that other refiners can't handle.

That can mean lower input costs. But that's only part of what I like about Phillips Its extensive petrochemical and midstream segments are faster-growing than refining, and management can allocate capital for better returns in those businesses.

This has helped Phillips 66 consistently generate some of the best returns on invested capital of any refiner:. PSX Return on Invested Capital TTM data by YCharts. While the deal will shrink the size of the company, it also makes it a better one overall.

That improvement has the potential to create tremendous value for investors in the future, making April a great month to dive in. These improvements set the company up to deliver healthy cash flow in the current oil market environment, which it intends to allocate toward a variety of priorities and create value for investors.

The company expects this formula to fuel double-digit annual returns for shareholders even if oil doesn't budge, with significant upside if crude prices improve. Jason Hall owns shares of Phillips Matt DiLallo owns shares of ConocoPhillips and Phillips Tyler Crowe owns shares of NOW. The Motley Fool owns shares of and recommends NOW. The Motley Fool has a disclosure policy. Matthew is a Senior Energy and Materials Specialist with The Motley Fool. He graduated from the Liberty University with a degree in Biblical Studies and a Masters of Business Administration.

You can follow him on Twitter for the latest news and analysis of the energy and materials industries: Skip to main content The Motley Fool Fool. Premium Advice Help Fool Answers Contact Us Login. Latest Stock Picks Stocks Premium Services. Stock Advisor Flagship service. Rule Breakers High-growth stocks.

oil stocks worth buying

Income Investor Dividend stocks. Hidden Gems Small-cap stocks. Inside Value Undervalued stocks. Learn How to Invest. Credit Cards Best Credit Cards of Best Credit Card Sign-Up Bonuses Best Balance-Transfer Credit Cards Best Travel Credit Cards Best Cash-Back Credit Cards Best No-Annual-Fee Credit Cards Best Small Business Credit Cards.

Mortgages Compare Mortgage Rates Get Pre-Approved How Much House Can I Afford? Taxes How to Reduce Your Taxes Deductions Even Pros Overlook Audit-Proof Your Tax Return What Info Should I Keep?

Smart Energy Investing When Oil Is Cheap

Helping the World Invest — Better. How to Invest Learn How to Invest. Personal Finance Credit Cards Best Credit Cards of Best Credit Card Sign-Up Bonuses Best Balance-Transfer Credit Cards Best Travel Credit Cards Best Cash-Back Credit Cards Best No-Annual-Fee Credit Cards Best Small Business Credit Cards.

Matthew DiLallo, Tyler Crowe, and Jason Hall. Apr 4, at 5: Prev 1 2 3 4 Next. Motley Fool push notifications are finally here Allow push notifications to help you stay on top of Breaking investing news Earnings coverage Market movers Special offers and more Subscribe to notifications You can unsubscribe at any time.

Rating 4,2 stars - 576 reviews
inserted by FC2 system