CHICAGO, Jan. 3, 2011 /PRNewswire/ -- Today, Zacks Investment Ideas feature highlights Features: ExxonMobil (NYSE: XOM), ConocoPhillips (NYSE: COP), Chevron (NYSE: CVX) and Occidental Petroleum (NYSE: OXY).
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The 4 Hottest Energy Stocks for 2011
Shares of the Big Oil energy companies, those large integrated energy companies with worldwide operations, have rallied since September and have been especially hot in December, with many of the Big Oil stocks hitting new 52-week highs in recent sessions.
Even with the recent rally in shares, many of the U.S.-based Big Oil companies are poised for more upside in 2011, with or without crude prices moving over $100. Many of them are trading with solid fundamentals, including attractive forward P/E ratios under 20, and juicy dividend yields. Earnings estimates are also on the rise. With high crude prices back in the spotlight, 2011 could be a big year for energy stocks.
ExxonMobil (NYSE: XOM) is the granddaddy of the American oil companies. Founded by John D. Rockefeller, and with a market cap of nearly $370 billion, it is one of the largest American companies and has operations all over the world.
In 2010, it completed a $41 billion acquisition of XTO Energy, which significantly increased its natural gas holdings.
Earnings rapidly accelerated in 2010. The company made just $4.01 per share in 2009 but analysts expect earnings to rise 47.2% in 2010 to $5.90 per share. In 2011, they see another 11% earnings growth with the Zacks Consensus at $6.56 per share. Recently, analysts have gotten more bullish on 2011, as 5 estimates have risen in the last month.
Even though shares have spiked, with the earnings growth, ExxonMobil is trading with a forward P/E of 12.4.
It rewards shareholders with a dividend yielding 2.4% and had $12.4 billion cash on hand at the end of the third quarter. Exxon is a Zacks #3 Rank (hold) stock. ConocoPhillips (NYSE: COP) is exploring in the oil sands in Canada and has a 20% interest in Lukoil, Russia's largest oil company. The company has an attractive forward P/E of only 11.5.
Earnings are following the same upward trajectory as Exxon's. In 2009, the company made $3.58 per share. In 2010, analysts expect earnings growth of 65.6% to $5.93 per share. Looking forward to 2011, 5 estimates have moved higher, and 1 lower, in the last month, pushing the Zacks Consensus up 12 cents to $6.52. This is earnings growth of 10%.
Yes, it is also cash rich, with $7.9 billion on hand as of the end of the third quarter of 2010. The dividend yield on this Zacks #3 Rank (hold) stock is also very attractive, currently yielding 3.3%.
Chevron (NYSE: CVX) is the cheapest of these four stocks, with a forward P/E of just 9.9. Out of the four, Chevron has also been the most affected by rebel group attacks on pipelines and other installations in Nigeria.
Earnings are expected to nearly double in 2010. The company made $4.84 in 2009 and the 2010 Zacks Consensus Estimate is calling for $9.25 per share. Not surprisingly, analysts are a bit more muted for 2011, projecting just a 6% increase in earnings to $9.81. But 4 estimates have moved higher, while only 1 has declined, in the last 30 days.
Chevron also pays a juicy dividend currently yielding 3.2%. Like its peers, the Zacks #3 Rank (hold) has plenty of cash, with about $11 billion in the coffers at the end of the third quarter of 2010.
Occidental Petroleum (NYSE: OXY) is the company that many investors tend to overlook because it is the smallest of the four, with a market cap of just $79 billion. But Occidental was the first U.S. company to re-enter the Libyan market after the embargo was lifted in 2005 and is one of the largest producers in Oman.
Once again, earnings are expected to be sharply higher in 2010. The company made just $3.79 in 2009 and is projected to make $5.61 per share in 2010, which is earnings growth of 48%.
2011 is also expected to be hot as 5 estimates were revised higher and 2 lower in the last month pushing the Zacks Consensus Estimate up to $7.04 from $6.93 in that time period. That is further earnings growth of 25.5%.
Occidental is the most expensive of the bunch, however, with a forward P/E of 17.6. The Zacks #3 Rank (hold) also pays the smallest dividend, with a yield of just 1.6%. But at the end of the third quarter of 2010 it too had cash on hand of $2 billion.
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