Oil stocks are on the move again, with crude oil rising off lows not seen since August this week on renewed chatter surrounding a possible OPEC production freeze agreement. As a reminder, this chatter has been going on since February in an effort to bolster oil prices and save the Persian Gulf states from deeper fiscal woes.
An actual agreement? Well, that’s been fleeting as Saudi Arabia, Iran and Iraq don’t much agree on anything these days amid regional strife, classic “prisoner’s dilemma” dynamics and a desire to protect its market share gains from U.S. shale oil producers since the price war started in 2014.
After a rough outline of a deal was hammered out in Algiers last month — only because the Saudis agreed to a production cut — doubts grew after Iraq complained that production numbers used to calculate the cap overestimated its current output. A “technical” meeting is due later this month to finalize the agreement.
But what really got investors excited were reports that Russia could hold informal talks with OPEC officials in Doha later this week, potentially strengthening any actual output cap deal by bringing in another large oil producer.
As a result, and despite the downside volatility in oil prices Wednesday thanks to bigger-than-expected stockpiles, a number of Big Oil stocks are poised for upside breakouts should OPEC actually reach a deal. Here are seven to watch:
Oil Stocks to Buy: Exxon Mobil (XOM)
Exxon Mobil Corporation (NYSE:XOM) shares look ready to break above five-month resistance near $88, setting up a challenge of the July high near $94.
The long consolidation range has coiled up support, quietly pushing XOM stock above its 20-, 50- and 200-day moving averages. The company reported better-than-expected earnings of 63 cents per share back on Oct. 28.
I have recommended the Dec $87.50 XOM calls to Edge Pro subscribers. The company will next report results on Jan. 31 before the bell. Analysts are looking for earnings of 77 cents per share on revenues of $64.8 billion.
Oil Stocks to Buy: Chevron (CVX)
Chevron Corporation (NYSE:CVX) shares jumped out of their eight-month trading range earlier this month thanks, in part, to an analyst upgrade by Morgan Stanley on Nov. 1 and an upgrad by Goldman Sachs on Oct. 31 — both of which helped push CVX stock to levels not seen since late 2014.
This after the company reported a big earnings beat of 68 cents per share (diluted), 29 cents above the consensus estimate.
CVX will next report results on Jan. 27 before the bell. Analysts are looking for earnings of 70 cents per share on revenues of $35.6 billion.
Oil Stocks to Buy: ConocoPhillips (COP)
ConocoPhillips (NYSE:COP) shares are challenging the highs of the trading range that has held it in stasis since April, with resistance near $48.
Bulls were encouraged by the results of the Analyst and Investors Meeting on Nov. 10, with the announcement of a new $3 billion share repurchase program, a asset divesture program totaling up to $8 billion and a trimmed capital expenditures budget.
The company will next report results on Jan. 26 before the bell. Analysts are looking for a loss of 41 cents per share on revenues of $7.9 billion.
Oil Stocks to Buy: Halliburton (HAL)
Halliburton Company (NYSE:HAL) is challenging its October high near $50, setting up a breakout to levels not seen since late 2014. In its earnings call last month, management highlighted improving results driven by a growing U.S. drilling rig count, cost management and efforts to regain profitability.
Should OPEC successfully continue to push energy prices higher, U.S. drilling and production activity will chase prices higher.
The company will next report results on Jan. 18 before the bell. Analysts are looking for earnings of a penny per share on revenues of $4.1 billion.
Oil Stocks to Buy: Whiting Petroleum (WLL)
Whiting Petroleum Corp (NYSE:WLL), an independent oil and gas producer with operations in the Permian shale basin, has languished between $9 and $7 since July, but looks ready for an upside breakdown after once again crossing above its 50-day and 200-day moving averages.
Investors enjoyed a series of analyst upgrades in late October.
The company will next report results on Jan. 25. The company is expected to report a loss of 33 cents per share on revenues of $354 million.
Oil Stocks to Buy: Transocean (RIG)
Transocean LTD (NYSE:RIG) looks ready to push up and out of a four-month trading range to return to its summertime highs. The stock has been consolidating over the past year near the $10-a-share level, a steep decline from the high of $50 set back in early 2013.
RIG stock was upgraded on Oct. 4 by analysts at Scotia Howard Weil after meeting with management, encouraged by the company’s prospects in deep-water recovery.
The company will next report results on Feb. 1 after the close. Analysts are looking for earnings of 10 cents per share on revenues of $814.2 million.
Oil Stocks to Buy: Tesoro Petroleum (TSO)
Tesoro Corporation (NYSE:TSO), an independent oil refiner, has pushed up and out of a three-month consolidation range, returning to levels not seen since March.
TSO stock was upgraded by Credit Suisse on Oct. 11 on strong management, valuation tailwinds and the expectation for decent industry-wide maintenance shutdowns that should lift results into 2017.
The company will next report results on Jan. 30 after the close. Analysts are looking for earnings of 75 cents per share on revenues of $7.4 billion.
Anthony Mirhaydari is founder of the Edge and Edge Pro investment advisory newsletters. A two-week and four-week free trial offer has been extended to InvestorPlace readers.
