Three 'Elite' Oil and Gas Stocks (HAL, PSX, TSO)
A new research report from UBS featured an "elite eight" momentum stocks that, despite outperforming the markets, the analyst believes still have plenty of room to run in the near term.
Three oil and gas stocks made the list: Halliburton (NYSE: HAL), Phillips 66 (NYSE: PSX) and Tesoro (NYSE: TSO). Below is a quick look at how these three stocks have fared and what analysts expect from them.
This oil field services giant is headquartered in Houston and has a market capitalization of about $37 billion, as well as a dividend yield near 1.2 percent. The price-to-earnings (P/E) ratio is less than the industry average, and the long-term earnings per share (EPS) growth forecast is more than 16 percent. The return on equity is almost 18 percent.
The number of shares sold short, as of the February 28 settlement date, represents a little more than two percent of the total float. That is the lowest level of short interest in Halliburton so far this year.
All but seven of the 34 analysts that follow the stock and were polled by Thomson/First Call recommend buying shares; 12 of them rate shares at Strong Buy. The analysts feel the stock plenty of head room as the mean price target represents almost 19 percent potential upside over the current share price.
The share price is up about 11 percent year-to-date after a pull back of about six percent in the past week. The stock has outperformed competitors Baker Hughes (NYSE: BHI) and Schlumberger (NYSE: SLB), as well as the broader markets, over the past six months.
This independent downstream energy company was spun off from ConocoPhillips (NYSE: COP) last spring, and it sports a market cap of more than $41 billion. Its dividend yield is about 1.9 percent. The P/E ratio is near 10 and the long-term EPS growth forecast is more than 10 percent. Phillips 66 has a return on equity of almost 19 percent.
The short interest in Phillips 66 was less than one percent of the float at the end of February. That was the lowest number of shares sold short since the initial public offering last May.
Of the 17 analysts surveyed, 10 recommend buying shares and none recommend selling. The mean price target, or where the analysts expect the share price to go, represents more than five percent potential upside. That target would be a post-IPO high.
The share price is up more than 18 percent year-to-date, though much of that gain came in late January and early February. But over the past six months, the stock has outperformed the likes of Valero Energy (NYSE: VLO), as well as the broader markets.
Based in San Antonio, this refiner and marketer of petroleum products has a market cap near $8 billion and a dividend yield of about 1.4 percent. Tesoro's P/E ratio is around 11, and the long-term EPS growth forecast is more than 12 percent. Furthermore, its return on equity is almost 19 percent.
The short interest in Tesoro was less than five percent of the float at the end of February. The number of shares sold short has been declining so far this year, and that was the lowest level of short interest since September.
The consensus recommendation of the 20 analysts surveyed is to buy shares of Tesoro, and it has been for the past three months. Their mean price target is more than five percent higher than the current share price. Note that the consensus target is a level the share price has not seen since 2007.
The share price is more than 25 percent higher year to date, though it has pulled back less than four percent from a recent multiyear high. Over the past six months, the stock has outperformed HollyFrontier (NYSE: HFC) and the broader markets.
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