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Oil Up Your Portfolio with 3 Stocks That Soared Last Week

Energy stocks have been dead money this year, brutalized by the slide in oil prices . Most stocks have slipped big time - 30% or more - as the commodity has collapsed and industry profit margins have sagged.

Oil's Horror Show

In June 2014, West Texas Intermediate (WTI) crude futures were trading above $110 per barrel. Now it's around $45 per barrel.

As is now widely recognized, the main culprit behind the plunge is a classic case of supply-demand mismatch. Surplus production remains an issue, particularly with the boom in American shale output. At the same time, weak global consumption is set to continue in the short- to medium term, thanks to Japan, Europe and now China. Finally, a strengthening dollar is holding back 'black gold' prices.

Rig Count Relief

It certainly has been a turbulent few days for oil futures, with plenty of ups and downs. But on Friday, the market decided that the way to go should be UP, as the U.S. rig count continued its steady, although slow decline.

Oil services firm Baker Hughes Inc. BHI said in its weekly rig count that U.S. oil producers idled twenty six more rigs over the past week, bringing the total to 614. This marks its 4th consecutive weekly decline. The oil rig count is now down 62% from a peak set a year ago and is now at its lowest level in more than five years.

Industry observers viewed the rig count data as an indicating a break in shale drilling activities in the world's biggest oil consumer. This helped the New York-traded oil futures rise 80 cents (or 1.8%) to settle at $45.54 a barrel on Friday, up about 1.8% for day. Friday's rally also helped the contract minimize its weekly loss to just 0.4%.

Supportive for Stocks

Last week, 'The Energy Select Sector SPDR' posted a jump of 2.37%. The broad-based Dow Jones Industrial Average and the S&P 500 index gained just 1.73% and 0.99%, respectively, over the same period. All major oil stocks - including mega-caps Exxon Mobil Corp. XOM , Chevron Corp. CVX and ConocoPhillips COP - relocated in the green with gains of 5.21%, 7.85% and 12.45%, respectively.

A Rare Opportunity to Build a Position in Energy

There are investors who see oil's brief rally as just the calm before the storm and decide to build or increase their position in oil-related companies. However, selecting stocks to buy could be a tricky proposition, especially with oil prices moving like a roller-coaster.

However, with the help of our Zacks Stocks Screener , one can locate stocks with green shoots. In particular, we have shortlisted 3 companies that have gone up an impressive 5% or more last week, and have a top Zacks Rank.

Apache Corp.APA : Founded in 1954, Apache is one of the world's leading independent energy companies engaged in the exploration, development and production of natural gas, crude oil and natural gas liquids. Sporting a Zacks Rank #2 (Buy), the Houston, TX-based oil and gas finder - which jumped 14.3% in last week's trading - has surprised earnings to the upside in each of the last four quarters. What's more, Apache's recently undertaken restructuring initiatives and cost cutting measures should enable the company to better its earnings performance in the future.

QEP Resources Inc.QEP : Another upstream player, Denver, CO-based QEP Resources looks for oil and gas in the Rockies, Williston Basin, Oklahoma, the Texas Panhandle, and Louisiana. The company's diversified reserve base in multiple U.S. basins, focused investment in high-return areas and competitive cost structure helped it deliver positive surprises in 3 of the last 4 quarters with an impressive average beat of 76.23%. QEP Resources, which surged 13.9% last week, currently has a Zacks Rank #2.

HollyFrontier Corp.HFC : Headquartered in Dallas, TX, HollyFrontier Corp. is an independent petroleum refiner and marketer, which manufactures gasoline, diesel fuel, jet fuel and other specialty products. The Zacks Rank #2 company, which was up 7.1% in the last 5 trading days, boasts of refining capacity is 443,000 Bbl/d plus a network of processing units spread over the Midwest. Continuing to benefit from the 'crack spread' of oil, quarterly earnings projections for HollyFrontier are on an upswing with the Zacks Consensus Estimate for the third quarter climbing 17 cents (or 12%) to $1.64 over the past month.

Bottom Line

While these stocks may not be breaking out to new highs, they certainly hold the potential to make investors standout gains even in these capricious times.

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Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report

CHEVRON CORP (CVX): Free Stock Analysis Report

BAKER-HUGHES (BHI): Free Stock Analysis Report

CONOCOPHILLIPS (COP): Free Stock Analysis Report

APACHE CORP (APA): Free Stock Analysis Report

QEP RESOURCES (QEP): Free Stock Analysis Report

EXXON MOBIL CRP (XOM): Free Stock Analysis Report

HOLLYFRONTIER (HFC): Free Stock Analysis Report

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Zacks Investment Research

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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