Bet Big On These Oil & Gas Stocks With Billionaire’s, T. Boone Pickens and Israel Englander $EOG $SWN $OXY $VLO
There is one thing we like more then covering oil & gas stocks (what else do we do?) and that is covering oil & gas stocks that high impact investors such as billionaires like Wilbur Ross, Warren Buffett, Ken Griffin are buying and in continued tradition here are 4 oil & gas stocks that BOTH Israel Englander and T. Boone Pickens are buying and holdings.
Pickens initiated a position of about 70,000 shares in EOG Resources (EOG), and Millennium increased its position by 58% to about 790,000 shares. This made the $29 billion market cap exploration and production company a top consensus pick between the two funds. EOG operates globally and has a strong position in Texas’s Eagle Ford shale. Thanks to the shale boom in the U.S., the company reported a strong quarter with revenue rising 18% and earnings rising 34% compared to the same quarter in 2011. This earnings report also beat analyst expectations. At the moment the stock trades at 21 times trailing earnings and 20 times forward earnings estimates. If the company continues growing at double-digit rates, which is what Pickens and Millennium seem to believe, it will prove under priced.
Southwestern Energy (SWN) was another stock that both funds owned at the end of June. BP Capital initiated a position of about 260,000 shares while Millennium more than doubled its holdings to about 2 million. Southwestern’s E&P segment is focused on a shale gas play known as the Arkoma Basin, though it also has onshore interests across the U.S. and Canada. The company also has a midstream operation that gathers and transports natural gas. Southwestern’s earnings have been declining recently- revenue was down 22% in its most recent quarter compared to a year ago- and it has been burning through cash, but if natural gas prices turn around it could prove to be in a good position. The sell-side consensus for 2013 earnings implies a forward P/E of 21.
Pickens and Millennium also liked Occidental Petroleum (OXY). BP Capital reported a position of about 40,000 shares, down a bit from the first quarter, while Millennium increased its position to about 750,000 shares. Occidental, with a market capitalization of about $70 billion, is a major oil company which also produces some oil-based chemicals. Its dividend yield based on current prices is 2.4% and its trailing price-to-earnings ratio is 11, so this pick seems to be value oriented. The company’s business is struggling, and so the forward P/E is 12, but it still is probably a decent investment for the energy sector (though perhaps not as wise as larger oil companies).
Another pick from both groups was Valero Energy (VLO). Valero is a refining and marketing company and also produces ethanol additives for use in gasoline. Valero looks even cheaper than Occidental: it matches the oil major’s dividend yield, its business is growing at double digit rates compared to a year ago in terms of revenue and earnings, it trades at book value, and its trailing P/E is 10. Based on analyst expectations for next year, the forward P/E is only 7. Millennium substantially increased its position in Valero to 2.4 million shares, and Pickens also added shares for a total of about 240,000.
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