Energy Plays with the Most Juice
By Michael Kaye
A looming U.S. military conflict with Iraq. Political turmoil in Venezuela, the world's fifth-largest oil exporter. A decision by OPEC to keep a lid on production in order to prop up crude prices. Put them all together, and you have a recipe for higher energy prices.
With crude oil futures topping $30 per barrel and prices expected to remain high because of all the geopolitical uncertainty, stocks of oil and gas producers, and integrated energy outfits, are poised to benefit. And considering that sector fundamentals are already positive (see BW Online, 12/17/02, "New Energy for Oil and Gas Stocks"), it's no surprise that S&P currently has an overweight opinion on the entire energy group.
So what are the top plays in this favored sector? Our screen this week looked for all stocks in the sector ranked 5 STARS (buy) by S&P analysts -- meaning that they're expected to outperform the overall market over the next 6 to 12 months. These 9 names emerged:
• Apache Corp. (APA )
• EOG Resources (EOG )
• Evergreen Resources (EVG )
• Exxon Mobil (XOM )
• Ocean Energy (OEI )
• Total Fina Elf 'B' ADS (TOT )
• Global SantaFe Corp. (GSF )
• Nabors Industries (NBR )
• Weatherford Intl (WFT )
Kaye is a portfolio services analyst for Standard & Poor's