Crude oil prices are up +16% in 6 weeks. Dividend investors continue to seek out low risk, high yield stock picks. So you would think that the major crude oil and energy stocks are good buys right?
Wrong. The fact of the matter is that as we enter another earnings season, the numbers just aren’t there for many crude oil blue chips. Even with oil prices improving right now, the ship has sailed on Q3 and those profits are all over but the counting. And as many investors will see soon, those profits may not be as healthy as many crude oil stocks would like.
Here are 10 major energy stocks that are suffering right now and should be cut loose before earnings.
Exxon Mobil Corp. (XOM)
Global oil and gas giant Exxon Mobil Corp. (NYSE: XOM) has had a rough year in 2010. Since January, the stock has dropped -8.1%, compared to small gains by the broader markets. Over the past 12 months, the stock has dropped a total of -5.9% as well. Despite a small rally in September, XOM has still not been able to make up for its poor performance earlier in the year. Analysts have scaled back on earnings estimates this quarter, projecting EPS of $1.40, after an actual EPS of $1.60 last quarter.
Petrobras (PBR)
Petrobras (NYSE: PBR) is an integrated oil and gas company. Year-to-date, PBR stock has declined -22.9%. With a current stock price of $36.71, Petrobras is far from its 52-week high of $53.46 from January. While Petrobras does pay a dividend to its shareholders, the .4% yield is not exciting anyone. While PBR made some progress in September, investors should be wary of this energy stock because of its yearlong performance.
BP PLC ADR (BP)
Since the well-known oil spill in the Gulf Coast earlier this year, BP PLC (NYSE: BP) has been reeling. Over the past 10 months, the stock has dropped -28.7%. BP stock dropped an extraordinary -50.7% from late April to early July, thanks to the Gulf disaster. While the stock has regained since mid summer, it is still well off its 52-week high of $62.38, with a current stock price of $41.41. In its last income statement, BP reported a net profit margin of -22.5%, which is surely causing headaches for company officials.
Total S.A. ADS (TOT)
Operating in over 130 countries, Total S.A. (NYSE: TOT) is an integrated oil and gas company based in France. Since January, Total’s stock price has slipped nearly -19%. After an EPS of $1.68 last quarter, experts are predicting a down quarter for the energy stock and have limited EPS estimates to $1.52. TOT currently trades at $51.83, making this a pricey energy stock that should be avoided based on its yearly returns.
Eni S.p.A. ADR (E)
Headquartered in Rome, Eni S.p.A. (NYSE: E) is involved with oil and gas, power generation petrochemicals, and engineering. This international company has also experienced a dismal 2010, as the stock has slid -14.2% since January. Likewise, Eni has missed three of its last four earnings estimates. The energy stock is currently trading at $43.39, which is almost $12 off its 52-week high from January. If its past earnings reports and stock performance are any indication, Eni is an energy stock worth dumping immediately.
Statoil ASA ADR (STO)
Statoil ASA (NYSE: STO) is an integrated energy company that was formerly known as StatoilHydro ASA. The company operates in more than 40 countries and is based in Norway. 2010 has been a forgettable year for this energy stock, which has fallen -14.6% since January. STO is trading just above its 52-week low of $18.39, with a stock price of $21.25. Like other stocks on this list, STO made some progress in September, but is still in the red for the year, and should be avoided when looking for energy stocks to buy.
Suncor Energy Inc. (SU)
Based in Calgary, Suncor Energy Inc. (NYSE: SU) is another integrated energy company that makes the list. SU stock has had a bumpy ride in 2010, and is down -6% over the past 10 months. While the stock saw rallies in April, June, August and September, it has been unable to sustain any momentum. Perhaps prepping for another letdown, analysts have scaled back earnings estimates to $0.41 after an EPS of $0.49 last quarter. If you own Suncor Energy stock, now might be the time to sell based on its volatility and unimpressive performance.
Imperial Oil Ltd. (IMO)
Imperial Oil Ltd. (AMEX: IMO) is involved in the exploration, production and sale of crude oil and natural gas. While IMO has not performed as poorly as other stocks on this list, it still has seen returns of -1.7% year-to-date. Shareholders can not be thrilled by the fact that IMO has missed earnings estimates for four consecutive quarters, including a miss of -19.4% last quarter. Its current stock price of $37.98 is slightly higher than its 52-week low of $35.18.
Devon Energy Corp. (DVN)
Independent energy company Devon Energy Corp. (NYSE: DVN) is engaged in the exploration, development and production of oil and natural gas. Year-to-date, the energy stock has slipped -12.3%, compared to modest gains by the broader markets. Like other stocks on this list, analysts have cut back on earnings estimates this quarter. Experts project EPS of $1.36 this quarter compared to an actual EPS of $1.53 last quarter. Trading at $64.41, DVN is an expensive energy stock whose performance has not justified its purchase.
Anadarko Petroleum Corp. (APC)
Headquartered in Texas, Anadarko Petroleum Corp. (NYSE: APC) rounds out the list of energy stocks to sell. Since January, shareholders have watched this stock fall -10.1%. While APC has rallied over the past few weeks, it is still reeling from a sharp July decline. A net profit margin of -1.1% last quarter is just another unsavory detail about this stock. Unless APC can continue to rally past its pre-July levels, consider selling this energy stock.
As of this writing, Louis Navellier did not own a position in any of the stocks named here.
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