As we all enjoyed Turkey and football last Thursday, Organization of the Petroleum Exporting Countries (OPEC) met in Vienna and decided not to cut production targets. Although OPEC’s decision really just confirmed what we knew before the meeting, the obviously anti-North American shale oil statements from some OPEC members after the meeting sent oil and oil-related stocks into a bit of a free fall.
At the same time, Russia has said it will not curtail production either. So, we are going to see some weakness in oil and oil-related stocks possibly lasting until next spring.
When a sector goes into a free fall like this the bottom fishers will soon be about suggesting its time to buy the oil related stocks but Portfolio Grader is telling us that not such a great idea. When I load all the oil tickers into Portfolio Grader, energy gets an overall grade of “D.” So, energy has poor fundamentals right now, and the numbers say the big institutions are selling, not buying, energy stocks.
No matter how strong the urge to bottom fish, there are some stocks you simply have to resist right now. Here are three oil stocks to sell:
Apache Corporation (APA)
Apache Corporation (APA) is a great example of an oil stock you simply must not own right now. Even before oil prices plunged, Apache has been posting weak revenue growth and profit declines.
Apache has enormous exposure to the shale oil fields of North America and the politically sensitive Egyptian oil fields. Wall Street analysts do not expect much from Apache over the next few years, and Portfolio Grader agrees.
Apache stock was downgraded to a “F” in November and is a “strong sell” right now.
Dawson Geophysical Company (DWSN)
Dawson Geophysical Company (DWSN) provides seismic data for oil and gas exploration companies and is facing a harsh truth right now. If oil remains anywhere near the current low levels, no one is going to be searching for oil.
We have excess supplies of oil around world right now, and with no cutback from OPEC, no one is going to feel the need to spend any money looking for more. The pending merger with another seismic data firm is not going to help Dawson Geophysical much as capital sending in the industry spirals downward.
DWSN stock has been rated “F” by Portfolio Grader since May and is still a “strong sell” at current prices.
Contango Oil & Gas Company (MCF)
Contango Oil & Gas Company (MCF) is one of the latest oil and gas stocks to be downgraded by Portfolio Grader. Contango Oil & Gas stock had been strong earlier this year, but the falling oil prices are starting to take a toll on MCF.
Wall Street was optimistic about the future of Contango Oil & Gas, but MCF stock has now posted four consecutive negative earnings surprises, and estimates are being lowered for 2014 and 2015.
Portfolio Grader has noticed the deteriorating fundamentals and downgraded MCF stock to “F” two weeks ago. Contango Oil & Gas stocks is now a “strong sell” at the current price.
Louis Navellier is a renowned growth investor. He is the editor of five investing newsletters: Blue Chip Growth, Emerging Growth, Ultimate Growth, Family Trust and Platinum Growth. His most popular service, Blue Chip Growth, has a track record of beating the market 3:1 over the last 14 years. He uses a combination of quantitative and fundamental analysis to identify market-beating stocks. Mr. Navellier has made his proven formula accessible to investors via his free, online stock rating tool, PortfolioGrader.com. Louis Navellier may hold some of the aforementioned securities in one or more of his newsletters.