Oil Stocks: Markets Prepare for a Nuclear Iran

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With the potential threat of nuclear weapons in North Korea pushed to the sidelines, Washington is shifting more of its focus onto Iran. Which is a good thing, because the threat level in the Middle East is running ever higher.

According to the New York Times, American officials who have assessed Iran's possible responses to any attack by Israel on its nuclear program believe Iran would almost certainly retaliate by launching missiles on Israel.

The secondary threat, and primary to U.S. officials, are supplemental and "terrorist-style attacks on United States civilian and military personnel overseas." More specially, they believe petroleum infrastructure in the Persian Gulf and American troops in Afghanistan would be targeted.

"The Iranians have been pretty good masters of escalation control," said Gen. James E. Cartwright, who was the top officer at Strategic Command and, as vice chairman of the Joint Chiefs of Staff, participated in war games involving both deterrence and retaliation on potential adversaries like Iran.

Of course, it is difficult to delve into the minds of leaders in Israel and Tehran, especially in the "heat of conflict." The U.S. can only provide their best assessment. For more as reported by the New York Times, click here.

Oil prices
In the event of an attack from Israel, Iran could and likely will try to block the Strait of Hormuz, which would greatly unsettle oil markets.

The Strait is a main route for oil in the gulf, and the market is well aware of the high stakes posed by closing the strait. Many believe $100 barrels will become the floor under the "new normal" for the oil market.

Business section: Investing ideas
So, as the threats of a war escalate, the economy prepares for impact. Will this benefit U.S. oil companies? For ideas on how to invest on such a trend, we ran a screen on oil companies that have been boosted by bullish sentiment.

Specifically, we took the top 200 by market cap and looked at institutional and insider buying trends. The names below have seen net positive purchases on both accounts.

Do you think institutional buyers and company insiders are making the right call? (Click here to access free, interactive tools to analyze these ideas.)

1. Kinder Morgan Management (NYSE: KMR  ) : Operates as an energy transportation and storage company in North America. Oil & Gas Pipelines. Net institutional purchases in the current quarter at 3.6M shares, which represents about 4.75% of the company's float of 75.82M shares. Over the last six months, insiders were net buyers of 45,000 shares, which represents about 0.06% of the company's 75.82M share float

2. NuStar Energy: Engages in the terminalling, storage, and transportation of petroleum products primarily in the United States, Canada, the Netherlands, St. Oil & Gas Pipelines. Net institutional purchases in the current quarter at 2.9M shares, which represents about 5.42% of the company's float of 53.51M shares. Over the last six months, insiders were net buyers of 201,030 shares, which represents about 0.38% of the company's 53.51M share float

3. Energy XXI (Nasdaq: EXXI  ) : Engages in the acquisition, exploration, development, and operation of oil and natural gas properties onshore in Louisiana and Texas and offshore in the Gulf of Mexico. Oil & Gas Equipment & Services. Net institutional purchases in the current quarter at 6.3M shares, which represents about 10.03% of the company's float of 62.83M shares. Over the last six months, insiders were net buyers of 56,448 shares, which represents about 0.09% of the company's 62.83M share float

4. Calumet Specialty Products Partners (Nasdaq: CLMT  ) : Produces and sells specialty hydrocarbon products in North America. Oil & Gas Refining & Marketing. Net institutional purchases in the current quarter at 1.4M shares, which represents about 5.48% of the company's float of 25.54M shares. Over the last six months, insiders were net buyers of 156,140 shares, which represents about 0.61% of the company's 25.54M share float

5. SemGroup (Nasdaq: SEMG  ) : Provides gathering, transportation, storage, distribution, blending, marketing, and other midstream services primarily to independent producers, refiners of petroleum products, and other market participants in the Midwest and Rocky Mountain regions of the United States, Canada, and the West Coast of the United Kingdom. Oil & Gas Pipelines. Net institutional purchases in the current quarter at 7.5M shares, which represents about 20.87% of the company's float of 35.93M shares. Over the last six months, insiders were net buyers of 11,519 shares, which represents about 0.03% of the company's 35.93M share float

6. Hercules Offshore (Nasdaq: HERO  ) : Provides shallow-water drilling and marine services to the oil and natural gas exploration and production industry in the U. Oil & Gas Drilling & Exploration. Net institutional purchases in the current quarter at 9.0M shares, which represents about 6.8% of the company's float of 132.44M shares. Over the last six months, insiders were net buyers of 55,000 shares, which represents about 0.04% of the company's 132.44M share float.

7. POSCO: Engages in the manufacture and sale of steel products in South Korea and internationally. Market cap of $28.42B. The stock has lost 10.51% over the last year

8. Shinhan Financial Group Company: Provides financial products and services to corporations, governments, institutions, and individuals in Korea and internationally. Market cap of $18.50B. The stock has lost 6.91% over the last year

9. SK Telecom Co.: Provides wireless telecommunications services using code division multiple access (CDMA) and wide-band CDMA technologies. Market cap of $9.34B. Offers a good dividend, and appears to have good liquidity to back it up -- dividend yield at 5.44%, current ratio at 1.43, and quick ratio at 1.41. The stock has lost 18.42% over the last year

10. Woori Finance Holdings Co.: Provides various banking and financial products and services in Korea. Market cap of $8.68B. This is a risky stock that is significantly more volatile than the overall market (beta = 2.19). The stock has lost 11.97% over the last year.

Interactive Chart: Press Play to compare changes in analyst ratings over the last two years for the stocks mentioned above. Analyst ratings sourced from Zacks Investment Research.

Kapitall's Rebecca Lipman does not own any of the shares mentioned above.

Motley Fool newsletter services have recommended buying shares of Hercules Offshore. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

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10/25/2016 4:00 PM
CLMT $3.70 Down -0.15 -3.90%
Calumet Specialty… CAPS Rating: ***
EXXIQ $0.18 Down -0.02 -9.50%
HERO.DL $1.16 Down -0.02 -1.50%
Hercules Offshore CAPS Rating: **
KMR.DL $0.00 Down +0.00 +0.00%
Kinder Morgan Mana… CAPS Rating: *****