One of the big stories of 2015 so far has been the collapse and subsequent stabilization of energy prices near the February lows. Much attention has been paid to metrics like Cushing, Oklahoma, inventory levels, shale oil production levels, drilling rig counts and the geopolitical situation in the Middle East for clues as to what’s going to happen next across energy stocks.
The Baker Hughes active U.S. rig count has collapsed to lows not seen since the depths of the recession. With capital expenditure budgets being cut, production is expected to start rolling over soon.
Moreover, with supply looking ready to fade, demand looks ready to rise given recent turnarounds in global economic activity measures.
No surprise, then, that West Texas Intermediate was testing resistance near $54 a barrel again this week. Or that energy stocks are looking set to break out of long multimonth downtrend patterns. That has lifted the Market Vectors Oil Services ETF (NYSEARCA:OIH) recommended to Edge subscribers on April 6.
Right now, five energy stocks are on the move and ready for new money: Cameron International Corporation (NYSE:CAM), ConocoPhillips (NYSE:COP), Schlumberger Limited. (NYSE:SLB), Anadarko Petroleum Corporation (NYSE:APC) and Devon Energy Corp (NYSE:DVN).
Read on to find out what will drive these energy stocks, and how far.
Energy Stocks to Buy: Cameron International Corporation (CAM)
Cameron International Corporation (NYSE:CAM) is an oil and gas equipment provider specializing in wellheads, drilling assets and manifolds. Barclays upgraded CAM stock back in February on details on orders and short-cycle revenues that gave the firm confidence about the path of Cameron’s results over the next several years.
A return to the 200-day moving average, which hasn’t been touched since October, would be worth a 19% gain from current levels.
Energy Stocks to Buy: ConocoPhillips (COP)
ConocoPhillips (NYSE:COP) stock has run up to about $67, near downtrend resistance going back to November around $67.50. An upward breakout would put the 200-day average in play for a gain of about 7% from current levels.
Shares got a lift in late January after ConocoPhillips announced it would slash its three-year capital budget to about $11.5 billion from $16 billion previously, then again in mid-March after COP provided its outlook for 2015-17.
Energy Stocks to Buy: Schlumberger Limited (SLB)
Schlumberger Limited. (NYSE:SLB) is the well-known Houston-based oil and gas equipment provider.
SLB is shrugging off a series of analyst downgrades in late March and looks ready to jump gap resistance near $90 as sentiment in the sector improves.
Energy Stocks to Buy: Anadarko Petroleum Corporation (APC)
Argus is looking for Anadarko Petroleum Corporation (NYSE:APC) to be well-positioned despite industry headwinds as APC has been quick to cut costs and has options such as using new technology and service offerings to boost profitability and market share.
They also expect investors to benefit from a ramp up in dividends and stock buybacks.
I’m looking for shares at the very least to return to the October/November highs just above $95 a share — which should be worth a 6% move from current levels.
Energy Stocks to Buy: Devon Energy Corp (DVN)
Devon Energy Corp (NYSE:DVN) is an independent shale energy company with operations in the Anadarko Basin, Barnett Shale, Eagle Ford, Permian Basin and elsewhere in United States and Canada.
DVN stock was added to Credit Suisse’s Focus List on April 9, setting up a possible breakout above its 200-day moving average — a level it hasn’t been above since September.
Anthony Mirhaydari is founder of the Edge and Edge Pro investment advisory newsletters.
