Spotting the best oil stocks to buy now is tricky for many investors because of the current low-price environment. Oil prices have fallen more than 45% in the last year. For the past three months, they've hovered at their lowest levels since the financial crisis.
Oil stocks have slumped along with them. BP Plc. (NYSE ADR: BP) is down 24.9% since oil's peak last July. Hess Corp. (NYSE: HES) has fallen 30.8% over the same time period. ConocoPhillips (NYSE: COP) has tumbled 9.5% in the last three months alone.
Despite all the bearish news, there are still plenty of profitable gems in the oil sector. And as you know, a market pullback gives us a time to buy.
Strong oil stocks will rebound this year as WTI and Brent prices head higher. Money Morning Global Energy Strategist Dr. Kent Moors sees oil trading in the low $80s range by the end of 2015.
Until then, we'll see more mergers, acquisitions, and consolidation among oil companies while prices are low. The sector promises to be a lot leaner by the time summer rolls around.
"We will see a restructuring of assets throughout the upstream (production) to midstream (transport and soon export) to downstream (refining and distribution) process," Moors explains. "All of these will hand us some very nice investment opportunities."
Here's a roundup of the best oil stocks to buy now as prices stabilize in 2015...
Best Oil Stocks to Buy Now
Enbridge Energy Partners LP (NYSE: EEP) transports oil from western Canada and the Bakken formation. The master limited partnership (MLP) accounts for 17% of total U.S. oil imports. While other energy companies have seen share prices fall alongside oil prices, EEP has gone in the opposite direction. Its stock has shot up 32.1% over the last year and Yahoo! Finance analysts project growth estimates of 32.7% by next year. The company's most attractive quality is its dividend - which is typical of MLPs. EEP's payout has increased every year since 2006 and currently stands at 6.29%. Here's more on EEP and the benefits of MLPs...
Royal Dutch Shell Plc. (NYSE ADR: RDS.A) is a multinational oil corporation headquartered in the Netherlands. As of 2014, Shell is the second-largest company in the world by revenue behind Wal-Mart Stores Inc. (NYSE: WMT). It produces about 3.1 million barrels of oil a day and operates in all three segments of the production process - upstream, midstream, and downstream. Shell sits on a hefty $200.5 billion and offers an impressive yield of 6.12%. Moors considers RDS.A a solid dividend play while oil prices start rebounding...
Valero Energy Corp. (NYSE: VLO) is an international manufacturer of transportation fuels, petrochemicals, crude oil, and power. The company owns 15 petroleum refineries with a combined storage capacity of about 2.9 million barrels a day. More than 70% of these assets are concentrated in glutted areas such as the Gulf Coast and Mid-Continent. Valero is valued at $32.8 billion and its stock has soared 28.1% this year. With a 2.8% year-over-year EPS increase, VLO is a great long-term buy as oil prices return to the $80 range later this year...
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World Point Terminals LP (NYSE: WPT) is a Missouri-based MLP that owns and operates midstream assets. The company manages 12.8 million barrels of storage capacity and 14 terminals in key production areas, including the East Coast, Gulf Coast, and Midwest. These scattered locations provide efficient access to demand and exports hubs. WPT commands a $662 million market cap and a huge 6.15% yield. Its stock is up 4.6% in the last six months - and it's poised for more gains. In fact, Money Morning Resource Specialist Peter Krauth predicts a 40% to 50% gain by September...
First Trust North American Energy Infrastructure Fund (NYSE Arca: EMLP) is an exchange-traded fund (ETF) investing in MLPs that derive at least half of their revenue from midstream assets such as pipelines and storage facilities. The fund holds 68 stocks, representing an array of energy companies headquartered in the U.S. and Canada. In January, it became the first actively managed ETF to own over $1 billion in assets. EMLP also benefits from Energy Transfer Partners LP's (NYSE: ETP) recent acquisition of Regency Energy Partners LP (NYSE: RGP). As EMLP's holding, ETP will become the second largest MLP on the market. EMLP is up 10.9% in the last year and offers a 3.19% yield...
The Impact of Falling Reserves: Faced with lower oil prices, the replenishment of oil reserves is beginning to take a massive hit. In 2014, Royal Dutch Shell replaced just 25% of its production. That's just 300 million barrels of new reserves to replace 1.2 billion barrels of production. Here's why this massive crunch means higher oil prices...
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