Zacks Industry Outlook Highlights: Chevron, Emerald Oil, Jones Energy, Cameron International and Weatherford International
CHICAGO, Aug. 22, 2014 /PRNewswire/ -- Today, Zacks Equity Research discusses the Oil & Gas, including Chevron Corp. (NYSE: CVX-Free Report), Emerald Oil Inc. (AMEX: EOX-Free Report), Jones Energy Inc. (NYSE: JONE-Free Report), Cameron International Corp. (NYSE: CAM-Free Report) and Weatherford International plc (NYSE: WFT-Free Report).
Industry: Oil & Gas
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. (NYSE: 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 $90+ 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 Emerald Oil Inc. (AMEX: EOX-Free Report) and Jones Energy Inc. (NYSE: JONE-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. (NYSE: CAM-Free Report). The 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.
Further, we remain optimistic on the near-term prospects of Weatherford International plc (NYSE: WFT-Free Report). Going forward, there are plenty of positives for the oilfield services behemoth, including its leading position in the global market, its broad and technologically complex product/service offerings, and its growing presence in the relatively stable Eastern Hemisphere. The company is well positioned to take advantage of the multi-year expansion in the international upstream segment. The process is ongoing and is likely to gather momentum through 2014.
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