After several years of truly great times for energy investors, the second half of 2008 punched us square in the nose. Oil and other energy prices plunged, and shares of energy-related stocks followed suit. Typically for Wall Street, the share-price drops vastly exceeded the actual performance declines. But more recently, companies like Halliburton (NYSE: HAL ) , Schlumberger, and Chevron have confirmed that earnings are taking a hit, too.
Not everyone has been caught off-guard by these wild swings, though. Halliburton, for example, may be off nearly 70% from its peak, but PetitMartinique was way ahead of Mr. Market. This CAPS member originally gave Halliburton a thumbs-up back in early 2007, holding on until July 2008, then logged another outperform rating last October, after most of the decline had already taken place. In all, PetitMartinique landed 76 points of market outperformance for these timely calls.
PetitMartinique is one of CAPS' All-Stars -- players with a rating of 80 or greater -- and has managed impressive stock-picking accuracy of 49% while racking up over 1,000 points. Halliburton isn't this member's only great call. Here's a look at a few other prescient picks:
|
Company
|
Date Picked
|
Call
|
Points
|
CAPS Rating
|
|
National Oilwell Varco (NYSE: NOV )
|
3/13/07
|
Outperform
|
139
|
*****
|
|
Transocean (NYSE: RIG )
|
2/28/07
|
Outperform
|
109
|
*****
|
|
Newmont Mining (NYSE: NEM )
|
10/23/08
|
Outperform
|
60
|
***
|
Data from CAPS.
So what is this investor looking at these days? Here are a few recent calls on CAPS:
|
Company
|
Date Picked
|
Call
|
CAPS Rating
|
|
BP (NYSE: BP )
|
12/10/08
|
Outperform
|
*****
|
|
United States Oil ETF (NYSE: USO )
|
12/5/08
|
Outperform
|
****
|
|
PotashCorp (NYSE: POT )
|
11/20/08
|
Outperform
|
****
|
Data from CAPS.
While not all of these picks may pan out, they could be a good place to start some further research. I decided to take a closer look at BP.
British perseverance
Adventure and excitement are not really BP's forte, so the Jack Bauers of the investing world probably won't find much to pique their interest from this lumbering energy giant. BP didn't have the kind of massive run-up that many smaller independent exploration or drilling firms enjoyed when oil was reaching for the stars. Its less steep descent since oil's fortunes fell means that it likely won't post rocketing growth if oil does make an abrupt about-face.
But for investors beginning to realize that a core set of quality, stable, principled companies should be their top priority, BP may be a bit more interesting.
Like the other oil majors, BP is an all-in-one energy powerhouse. It finds and extracts oil, transports it, refines it, and gets it to customers through retail gas stations. In addition, the company produces and markets natural gas and natural gas liquids, and it has interests in solar cell production facilities and wind farms -- positioning it well for the changing energy landscape. Despite a few bumps in the road, the company has been a fairly stable performer financially, producing enough cash to self-fund its capital expenditures, pay a snazzy dividend, and buy back a significant number of shares. And while the decline in energy prices will no doubt slash BP's earnings, its conservative balance sheet should help it weather the tough times.
Aptly named CAPS member hopetrader recently gave BP a thumbs-up, on the expectation -- or maybe the hope -- that oil prices would boom once again by summer:
By the summer-time the energy sector will be booming. You will wish you bought this during the summertime when gas prices rise. One things about alternative energy you need energy to create it... There's not a better company from my point of view in the sector. Buy for long term growth and reinvest dividends. Great dividend and great price.
But here's the important question: What's your take on BP? Will it remain weighed down by brutal financial markets, or will it break out of its funk? Get in on the action by clicking over to CAPS. Our investing community is absolutely free, with more than 125,000 stock pickers chipping in to find the market's best investments.
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