Zacks Industry Outlook Highlights: Chevron, Callon Petroleum, Miller Energy Resources, Abraxas Petroleum and Cameron International

Zacks

For Immediate Release

 
Chicago, IL – April 30, 2014 – Today, Zacks Equity Research discusses the Oil & Gas, including Chevron Corp. (CVX-Free Report), Callon Petroleum Co. (CPE-Free Report), Miller Energy Resources Inc. (MILL-Free Report), Abraxas Petroleum Corp. (AXAS-Free Report) and Cameron International Corp. (CAM-Free Report).
 
Industry: Oil & Gas

Link: http://www.zacks.com/commentary/32328/oil--gas-stocks-may-feel-the-heat

As far as overall results of the Oil/Energy sector is concerned, it displays a mixed trend.

For the 32% industry components that have come out with their Q1 reports -- comprising 21.0% of the sector market capitalization -- earnings rose 13.7% during the March quarter, a substantial decline from the 22.8% increase witnessed in the previous quarter. However, there was some improvement on the revenue front, which was up 9.3% in the first quarter as against a gain of 8.8% in the fourth quarter.

The sector has also been erratic in terms of beat ratios (percentage of companies coming out with positive surprises). The earnings "beat ratio" was an impressive 71.4%, but the revenue "beat ratio" was underwhelming, at 42.9%.

For more information about earnings for this sector and others, please read our Earnings Trends report.

OPPORTUNITIES

Considering the turbulent market dynamics of the energy industry, we always advocate the relatively low-risk conglomerate business structures of the large-cap integrateds, with their fortress-like balance sheets, ample free cash flows even in a low oil price environment and growing dividends.

Our preferred name in this group remains Chevron Corp. (CVX-Free Report). Its current oil and gas development project pipeline is among the best in the industry, boasting large, multiyear projects. Additionally, Chevron possesses one of the healthiest balance sheets among its peers, which helps it to capitalize on investment opportunities with the option to make strategic acquisitions.

While all crude-focused stocks stand to benefit from rising commodity prices, companies in the exploration and production (E&P) sector are the best placed, as they will be able to extract more value for their products. In particular, we suggest exposure to small-cap, undervalued E&P players like Callon Petroleum Co. (CPE-Free Report), Miller Energy Resources Inc. (MILL-Free Report) and Abraxas Petroleum Corp. (AXAS-Free Report), which enjoy the benefits of crude oil price leverage.

One may also capitalize on this opportunity with the related business sector of energy equipment service providers. Our top pick in this space is Cameron International Corp. (CAM-Free Report). This oil drilling equipment maker boasts of a diversified product portfolio, specialty service capabilities and proprietary technological expertise. Other positives for Cameron include a strong backlog position, growing international operations and a favorable outlook for subsea activity levels.

About Zacks
 
Zacks.com is a property of Zacks Investment Research, Inc., which was formed in 1978. The later formation of the Zacks Rank, a proprietary stock picking system; continues to outperform the market by nearly a 3 to 1 margin. The best way to unlock the profitable stock recommendations and market insights of Zacks Investment Research is through our free daily email newsletter; Profit from the Pros. In short, it's your steady flow of Profitable ideas GUARANTEED to be worth your time!  Click here for your free subscription to Profit from the Pros.
 
Get the full Report on CVX- FREE
Get the full Report on CPE- FREE
Get the full Report on MILL- FREE
Get the full Report on AXAS- FREE
Get the full Report on CAM- FREE
 
Follow us on Twitter:  http://twitter.com/zacksresearch
 
Join us on Facebook:  http://www.facebook.com/home.php#/pages/Zacks-Investment-Research/57553657748?ref=ts
 
Zacks Investment Research is under common control with affiliated entities (including a broker-dealer and an investment adviser), which may engage in transactions involving the foregoing securities for the clients of such affiliates.
 
Media Contact
Zacks Investment Research
800-767-3771 ext. 9339
support@zacks.com
http://www.zacks.com

 
Past performance is no guarantee of future results. Inherent in any investment is the potential for loss. This material is being provided for informational purposes only and nothing herein constitutes investment, legal, accounting or tax advice, or a recommendation to buy, sell or hold a security. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. It should not be assumed that any investments in securities, companies, sectors or markets identified and described were or will be profitable. All information is current as of the date of herein and is subject to change without notice. Any views or opinions expressed may not reflect those of the firm as a whole. Zacks Investment Research does not engage in investment banking, market making or asset management activities of any securities. These returns are from hypothetical portfolios consisting of stocks with Zacks Rank = 1 that were rebalanced monthly with zero transaction costs. These are not the returns of actual portfolios of stocks. The S&P 500 is an unmanaged index. Visit http://www.zacks.com/performance for information about the performance numbers displayed in this press release.

Read the analyst report on CVX

Read the analyst report on CPE

Read the analyst report on MILL

Read the analyst report on AXAS

Read the analyst report on CAM


Zacks Investment Research

Rates

View Comments (0)