Baron Rothschild, an 18th-century British nobleman and member of the renowned banking family, is credited with saying that “the time to buy is when there’s blood in the streets.” He should know. Rothschild made a fortune buying in the panic that followed the Battle of Waterloo against Napoleon. If he were alive today, one can be pretty sure he would be looking at the oil stocks and the energy sector.
After seeing the May forward West Texas Intermediate contract trade negative prior to expiration, it doesn’t get much worse than that, and with the price of crude oil hitting its lowest level since the last century, it’s a pretty good bet that the proverbial baby has gone out the window with the bathwater.
We decided to screen the BofA Securities energy research universe looking for quality energy stocks that are rated Buy and trading under the $10 level. While probably a much better play for aggressive accounts that are somewhat contrarian, just remember that in the past stocks like Apple, AMD, Bank of America and many more traded in the single digits during desperate times.
Five stocks hit our screens and could be huge winners for patient investors who can see beyond the current turmoil.
This company was long considered an industry leader but its stock has been absolutely battered. Apache Corp. (NYSE: APA) is an independent energy company that explores for, develops and produces natural gas, crude oil and natural gas liquids (NGLs). The company has operations in onshore assets located in the Permian and Midcontinent/Gulf Coast onshore regions, and offshore assets situated in the Gulf of Mexico region. It also holds onshore assets in Egypt’s Western desert and offshore assets in the North Sea region, including the United Kingdom.
Apache also has an offshore exploration program in Suriname. As of December 31, 2019, it had total estimated proved reserves of 551 million barrels of crude oil, 186 million barrels of NGLs, and 1.6 trillion cubic feet of natural gas. The company remains an acquirer/exploiter/explorer and a fiscally conservative company that has grown its reserves and production consistently via acquisitions and organic projects.
Investors receive a 1.06% dividend. BofA Securities has a gigantic $22 price target on the shares, while the Wall Street consensus target is $17. Apache stock closed trading on Wednesday at $9.42, up nearly 10% on the day.
This stock has been hit as oil has tumbled and is at the lowest level in over 25 years. Devon Energy Corp. (NYSE: DVN) is an independent energy company that primarily engages in the exploration, development and production of oil, natural gas and natural gas liquids (NGLs) in the United States and Canada. It operates approximately 19,000 wells.
The company also offers midstream energy services, including gathering, transmission, processing, fractionation and marketing to producers of natural gas, NGLs, crude oil and condensate through its natural gas pipelines, plants and treatment facilities.
Production is weighted toward crude oil while growth opportunities are liquids focused, anchored by the Delaware Basin, SCOOP/STACK, Eagle Ford Shale, Canadian Oil Sands, and the Barnett. Devon also owns equity in the publicly traded midstream master limited partnership EnLink.
Shareholders receive a 4.52% dividend, which could be at risk. The BofA Securities price target is a whopping $15, while the consensus is set at $12. The last trade for Devon Energy stock on Wednesday hit the tape at $9.74, up almost 8% on the day.