Lucky #7: Energy Stocks With Notable ROICs
Companies with good ROIC, or return on invested capital, are great choices when looking for stocks. Of coarse, everyone is looking for a return on their investments, why not seek out those stocks with proven ROIC. Seems like a logical approach to me. Isac Simon has bad the number 7 a good thing with these 7 energy stocks and their great ROICs.
1. ExxonMobil (NYSE: XOM )
This behemoth has traditionally been among the best in the business at generating returns. Its ROIC stands at 13%, surpassing all its industry peers. This is fairly astounding considering the scale of Exxon’s operations. Its ROIC’s improvement from the previous year’s 12% indicates bigger growth in operating profits when compared against invested capital.
2. Southwestern Energy (NYSE: SWN )
This natural gas producer’s ROIC has gradually slipped over the last three years. Still, its current value of 12% is none too shabby. Bearish market conditions for natural gas have taken their toll on Southwestern, but as gas demand picks up again, I believe a rebound is only a matter of time.
3. Occidental Petroleum (NYSE: OXY )
Impressive first-quarter results fueled by high oil prices have definitely helped this company boost earnings. Current ROIC stands at 12%, which improved a tad from 11% the previous year, but part of a series of ups and downs over the past five years. Higher production will definitely help this $86 billion company compete better against the Big Three in the E&P business.
4. Chevron (NYSE: CVX )
One leg of the Big Three, this integrated giant’s ROIC currently stands at a little more than 12%. This is a huge improvement from less than 9% a year ago. The company’s year-over-year average CCC fell from 6.3 days to 2.0 days (again, a good thing). NOPAT grew 54%, on an invested capital growth of just 11% in the same period. That metric’s currently nearing a five-year high.
5. Ultra Petroleum (NYSE: UPL )
This company’s management is obsessed with generating great returns. Current ROIC impressively stands at a little more than 11%. Average CCC dropped to -172 days, from -153 days a year ago. Foolish colleague Dan Dzombak previously explained how Ultra creates value by keeping a lid on production costs despite a bearish natural gas market.
6. Marathon Oil (NYSE: MRO )
With an ROIC slightly less than 11%, this integrated company has been consolidating. The company’s current CCC of 2.3 days is the lowest it has been in the last six years.
7. Apache (NYSE: APA )
This company bought more than $11 billion in natural gas assets in 2010 alone, driving its ROIC below 10% for the first time in four years. However, once demand for gas picks up, these investments could generate solid returns.
Many of these stocks are big energy companies, which can be intimidating for you inexperienced investors. However, with proven ROICs, it could make it a little bit easier to jump in and play with the big dogs. Due diligence will help make you decision easier, but at least you now have a little research under you belt.
Quotes taken from report by Isac Simon, Read the entire article here.
This is not an offer to buy or sell securities. Oil investment carries with it very high risks. The information contained within this site has not been nor will it be verified by Petro Lucre LLC D.B.A Turn Key Oil and is subject to change at any time. We are not a United States Securities Dealer or Broker or United States Investment Adviser. Do your own due diligence and consult with a licensed professional before making any investment decisions. Please read our full disclaimer before making any decisions.
