Inflation Can’t Help These Energy Picks
There’s a lot of talk about a pending surge in commodity prices due to inflation in 2011. Runaway government spending and a weak dollar have set the stage for a rally in the price of gold, crude oil, corn and a host of other commodities. That has caused many investors to seek out agriculture, metals and energy stocks to play this trend.
Of particular note are some energy stocks with good dividend yields. Stockholders think that a guaranteed payday coupled with the prospect of crude oil price inflation is a guaranteed recipe for profits in 2011.
But don’t think that all energy stocks are cut from the same cloth. The bottom line is that some poorly run energy blue chips could do far more harm than good to your portfolio in 2011.
Here are four such crude oil stocks to avoid next year.
ENI (E)
ENI S.P.A. (NYSE: E) is involved in the oil and gas, power generation, petrochemicals, oilfield services and engineering industries. 2010 has been a forgettable year for E stock, which has dropped -14%, compared to gains of +11% and +10% for the S&P 500 and Dow Jones, respectively. ENI has also missed earnings estimates three of the last four quarters. E stock is currently trading just below the middle of its 52-week range of $35.10 to $54.16.
TOTAL (TOT)
TOTAL S.A. (NYSE: TOT) is an integrated international oil and gas company that has also had a rough year. Since January, this stock has lost -17%, compared to gains by the broader markets. While the stock did recover slightly in September and October, TOT is down -2% since that start of November. Analysts aren’t thrilled with this stock either, as they have projected EPS of $1.63 this quarter, after the stock posted EPS of $1.65 last quarter. Sell this overweight stock before it does any more damage to your portfolio.
BP (BP)
If you haven’t heard of the struggles for BP PLC (NYSE: BP) in 2010, then you’ve probably been living under a rock. Year-to-date, this stock has slid -25% compared to gains by the broader market. Before the oil spill in the Gulf Coast, BP was trading around $60 per share. After the spill however, the stock hit a 52-week low $26.75 in June. Analysts have projected earnings of just $1.56 this quarter, after BP posted earnings of $1.77 last quarter. While BP may have rebounded slightly since this summer, this stock should still be sold.
Petrobras (PBR)
Integrated oil and gas company Petrobras (NYSE: PBR) is another energy company that would like to forget about 2010. Over the past 12 months, PBR is down -29.6% compared to gains by the broader markets. PBR stock has been stagnant as of late, dropping -1% since the start of November. Finally, this energy stock trades just a few dollars above its 52-week low of $31.21. Sell PBR stock now.
As of this writing, Louis Navellier did not own a position in any of the stocks named here.
