3 Energy Stocks I Want to See Rise From the Grave

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The big drop in these stocks is a sign that investors are fearful that these companies won't make it if oil prices stay weak for too much longer. This drop has been a real drag on my returns -- and my ego, as I've been pretty vocal in my belief of their bright futures. However, I still think each has a bright future, if oil prices rises again.

What killed the energy stock?

While virtually all energy stocks are down over the past year due to weak oil prices, this trio was hit harder than most. All three dug their own grave by borrowing a lot of money to fund ambitious growth goals when oil prices were higher. That debt has become a noose around their necks and could send each to an untimely death.

In order to avoid that fate all three companies are working to pay down their debt burdens. Seadrill and Linn both cut their dividends in order to preserve cash to be used for reducing their leverage, while SandRidge has dramatically cut spending on new wells so that it doesn't dig itself into an even deeper hole. However, those moves might not be enough to save these stocks; what they really need is for higher oil prices to come back to life.

The good news is that there are signs on the horizon that oil prices could spring back later this year. Demand for gasoline in the U.S. is picking up and is up 2% over the past year. Meanwhile, oil supplies are falling as drillers cut back on new wells. This could lead to a second-half rally in oil prices and a resurrection of my left-for-dead energy stocks.

Investor takeaway

For better or worse I'm an eternally optimistic kind of guy. That's why I've yet to sell any of my foul-smelling energy stocks. I hold on to hope that oil prices will rise again, which would bring these three energy stocks back from the grave.

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The article 3 Energy Stocks I Want to See Rise From the Grave originally appeared on

Matt DiLallo owns shares of Linn Energy, LLC, SandRidge Energy, and Seadrill. The Motley Fool recommends Seadrill. 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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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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