U.S. Markets closed

5 High-Yield Energy Stocks Bought by Gurus

In light of China exempting tariffs on U.S. chemical and oil products, five energy stocks that have high guru buys and dividend yields are Occidental Petroleum Corp. (NYSE:OXY), Schlumberger Ltd. (NYSE:SLB), Chevron Corp. (NYSE:CVX), Exxon Mobil Corp. (NYSE:XOM) and BP PLC (NYSE:BP).

The "High Dividend Yield" screen, a GuruFocus Premium feature, lists the stocks with high guru buys over the past three months and with a dividend yield of at least 4% over the trailing 12 months.


U.S. market indexes set new intraday highs as U.S.-China trade deal advances

On Thursday, a few days after the U.S. and China agreed to "phase one" of their trade deal, China bolstered the trade agreement by announcing tariff exemptions for several chemical and oil imports from the U.S., including high-density polyethylene (HDPE), linear low-density polyethylene (LLDPE) and refined oil products that include white oil and food-grade petroleum wax. All U.S. broad market indexes set new record intraday highs on the news, with the Standard & Poor's 500 Index eclipsing 3,200 for the first time.

67e01e69683e7e825c98eb2effd61756.png

Energy sector remains undervalued

Even though the overall stock market remains significantly overvalued based on Berkshire Hathaway Inc. (NYSE:BRK.A)(NYSE:BRK.B) CEO Warren Buffett (Trades, Portfolio)'s market indicator, the energy sector still remains undervalued based on Robert Shiller's cyclically-adjusted price-earnings ratio. With a Shiller price-earnings ratio of 15.90, the energy sector has the lowest valuation among the 11 market sectors.

1576774974839.png

As such, investors might seek good opportunities within the energy sector. Gurus are also buying shares in energy companies according to the "High-Dividend Yield" screener.

Occidental Petroleum

Fourteen gurus have bought shares in Occidental Petroleum, including Buffett's Berkshire. During the third quarter, Berkshire purchased 7,467,508 shares, dedicating a slim 0.15% of its $214.67 billion equity portfolio to the stake.

d9cb840793e59e9ec460dea837b90421.png

Berkshire purchased the shares in Occidental in support of the Houston-based company's acquisition of Anadarko, which closed on Aug. 8. GuruFocus ranks Occidental's profitability 6 out of 10: operating margins are outperforming 75.18% of global competitors despite returns on equity outperforming just 57.85% of global energy exploration and production companies.

b22b9009ab10c58faa98d3eaefe754ca.png

Occidental's dividend yield of 8.15% is near a 10-year high and outperforms 78.56% of global competitors. The company's valuation ranks 8 out of 10 on the heels of price-book and price-sales ratios near their 10-year lows despite underperforming over 60% of global competitors.

Other gurus with large holdings in Occidental include Dodge & Cox and Carl Icahn (Trades, Portfolio).

f821a0e7f23138cf853b40e48c9720b4.png

Schlumberger

Eleven gurus have purchased shares in Schlumberger, which offers a dividend yield of 5.07%.

02a1f16f87c8a9a544443f246f0e0159.png

The Houston-based company supplies products and services to the oil and gas industry. GuruFocus ranks Schlumberger's profitability 7 out of 10 on the back of a three-star business predictability rank and operating margins that are outperforming over 62% of global competitors. Despite this, the website also lists three red flags for Schlumberger, including contracting revenue and profit margins over the past three to five years.

2176c070cf0eafa8eb0819e12da24ce8.png

Gurus with large holdings in Schlumberger include Dodge & Cox and First Eagle Investment (Trades, Portfolio).

e9fdce6c5e81c282f10e63ed8e7ea49e.png

Chevron

Ten gurus have purchased shares in Chevron, which offers a dividend yield of 4.03%.

4ac83296aa6115ebeb13d95758079467.png

The Sam Ramon, California-based company engages in the exploration, refining and production of oil across the globe. GuruFocus ranks Chevron's financial strength 7 out of 10 on several positive investing signs, which include a strong Altman Z-score of 3.19 and debt ratios that outperform over 70% of global competitors.

d202718674f858145fc669dc89950a24.png

Chevron's profitability ranks 6 out of 10 on the heels of operating margins that outperform over 62% of global competitors despite contracting over the past five years. Despite this, Chevron's valuation ranks just 3 out of 10 as its price-earnings and price-sales ratios underperform over 63% of global energy companies.

329e6d2916da3481c3f4008fdb6f2314.png

Exxon Mobil

Nine gurus have purchased shares in Exxon Mobil, which offers a dividend yield of 4.93%.

d92153d0280e28c08deac059f5f2f2f4.png

The Irving, Texas-based company explores for, produces and refines oil around the world. GuruFocus ranks Exxon Mobil's profitability 7 out of 10 on several positive investing signs, which include net margins and returns outperforming over 64% of global competitors despite operating margins contracting over the past five years.

36083a61c805df88d7818ee857e9bb9a.png

BP

Eight gurus have purchased shares in BP, which offers a 6.52% dividend yield.

f7ea8cc988ec60feed2449fc06004d7d.png

The U.K.-based company engages in the production and refining of oil across the globe. GuruFocus ranks BP's profitability 5 out of 10: Operating margins are outperforming just 52% of global competitors, although the company's return on equity and three-year revenue growth rate both outperform over 62% of global energy companies.

d8294525f5cf218172628ae6618becb8.png

Disclosure: No positions.

Read more here:

  • 5 Attractive Christmas Deals: Stocks With High Value and Quality
  • Signature Select Canadian Fund's Top 5 Buys
  • Ketterer's Causeway International Value Buys 5 Stocks in 3rd Quarter



Not a Premium Member of GuruFocus? Sign up for a free 7-day trial here.

This article first appeared on GuruFocus.