Tag Archives: XOM

Hot Safest Stocks To Watch Right Now

Gold prices have been all over the place in the past one year, but some gold stocks have moved in only one direction: south. As of this writing, Canada-based gold miner Eldorado Gold (NYSE:EGO) is down a whopping 66% in one year. South African miner Sibanye-Stillwater (NYSE:SBGL) is swiftly closing in, having shed as much as half its value with the bulk of the decline coming in just the past couple of months. Among the larger gold miners, Kinross Gold (NYSE:KGC) is down about 11% in one year, or 15% year to date.

Are any of these gold stocks worth buying now? A case-by-case analysis should help you decide.

Hot Safest Stocks To Watch Right Now: Brookfield Renewable Powerr Fund(BEP)

Personally, I think dividend investors will get the best bang for their buck from a dividend stock with companies that can offer a rather generous yield an maintain a reasonable growth rate. For a company to be able to achieve these two things over the long haul, it needs to have a business model that has quite a bit of clarity several years out, and a management team with a proven track record of capital allocation. Brookfield Renewable Partners checks every one of these boxes.

Brookfield Renewable owns and operates about $25 billion in power-generating assets globally, most of which are hydropower stations. The assets it owns have contracts in place that give an immense amount of revenue clarity for several years into the future. Being able to project revenue with such certainty allows Brookfield to distribute such a large portion of its cash to shareholders in the form of a dividend currently yielding 6.6%. 

Having assets that throw off a lot of cash isn’t that uncommon, though. What’s rare is a management team like Brookfield’s that can effectively manage the growth of the business when so much cash is dedicated to investors. One thing that Brookfield’s management has proven to be quite adept at is sniffing out undervalued investments and buying them at discounted or distressed rates. Examples were when it bought hydropower stations in Colombia at an auction where it was the only participant as well as the acquisition of TerraForm Global when its former parent, SunEdison, was in bankruptcy proceedings. Buying assets when they are out of favor has led to higher rates of return.

This formula, coupled with prudent management of the balance sheet, has worked exceptionally well for the company as it has outpaced the S&P 500 on a total return basis by a wide margin. As long as Brookfield sticks to this strategy, its stock should continue to reward investors for a long time. 

Hot Safest Stocks To Watch Right Now: Enterprise Products Partners L.P.(EPD)

Enterprise Products Partners came public nearly 20 years ago to little fanfare. The master limited partnership (MLP) raised a little under $250 million at the time to fund development projects and acquisitions. That seed money jump-started the company’s growth journey, which has seen it become an energy infrastructure powerhouse over the years. As a result, initial investors have done quite well. Overall, Enterprise has generated a total return of more than 1,730%, which would have turned a $5,000 investment at its IPO into more than $86,500. For comparison’s sake, the S&P 500’s total return over that time frame is 268%, which would have turned $5,000 into just $13,400.
A main driver of that return has been Enterprise’s spectacular ability to increase its distribution to investors. Since its IPO, the MLP has increased its payout 64 times, including in each of the last 55 consecutive quarters. That growing income stream has generated the lion’s share of the company’s total return.
While Enterprise Products Partners might not repeat that performance over the next 20 years, it still has plenty left in the tank. The company recently put the finishing touches on $5.3 billion of growth projects and has another $4.9 billion under construction. Those expansions should fuel continued distribution increases so that it can create more value for investors in the coming years.

Hot Safest Stocks To Watch Right Now: Exxon Mobil Corporation(XOM)

ExxonMobil is one of the world’s largest integrated energy giants. It produces oil and natural gas on the upstream side of its business and chemicals and refined products on the downstream side. This helps to even out its performance when energy prices are volatile — a fairly common condition. This balanced model also speaks to the highly conservative culture of the energy giant, which is further highlighted by its impressive 36-year streak of annual dividend increases and its low debt level. (Long-term debt is just 10% of the capital structure.) 

That conservatism, however, can leave it flat-footed when markets are moving quickly. That’s exactly what’s happening right now. ExxonMobil started pulling back on capital spending during the deep oil downturn that started in mid-2014, and has been late to hit the accelerator now that crude prices have recovered. For example, first-quarter earnings were up roughly 15% year over year, but many of its integrated peers have been doing better. For example, Royal Dutch Shell, which made a huge acquisition during the downturn, saw Q1 earnings advance nearly 63%.    

Another key problem is that ExxonMobil’s production has been weak: It fell slightly in each of the last two years, and did so again, year over year, in Q1. Recently, the Motley Fool’s Tyler Crowe described Exxon as "testing" its investors — and that situation isn’t likely to end for a couple of years, as the company’s large growth projects aren’t expected to add materially to its revenues or profits until 2020. In the meantime, investors get to watch capital spending rise with little return on that investment.

XOM Price to Tangible Book Value Chart

XOM PRICE TO TANGIBLE BOOK VALUE DATA BY YCHARTS

It’s no wonder, then, that ExxonMobil’s dividend yield is on the high side of its historical range at around 4%. And the company’s tangible book value is lower than it has been since the late 1980s. Don’t expect a quick turnaround, either, as large projects in Guyana, Brazil, and Mozambique, among other locations, will take time to develop. But once they are up and running — they’ll account for roughly half of the energy giant’s upstream earnings by 2025 — investors will likely reward ExxonMobil stock with a higher valuation. It is also working on large new downstream projects that will help to boost results, but they too are a few years from completion.   

While these long-term plans play out, however, patient investors can collect large yields backed by a growing dividend at a conservative energy company. That’s a worthwhile trade-off in my opinion.

Hot Safest Stocks To Watch Right Now: Buckeye Partners L.P.(BPL)

Buckeye Partners is a relatively small midstream energy limited partnership, and a more aggressive play for investors. The partnership’s core assets are pipelines and storage. It differentiates itself from many of its peers because it has a truly international presence, with storage assets located in the Caribbean, Europe, Asia, and the Middle East. The problem is that Buckeye’s distribution coverage ratio has been notably weak, falling to just 1 in 2017. Investors are worried that the partnership’s current round of capital spending will compel it to cut the distribution.   

That’s not an unreasonable expectation. However, management has steadfastly continued to assert that it will support the dividend. As recently as June 5, they stated: "Given our current outlook, we have no intentions of cutting Buckeye’s distribution." And a cut would likely be a last-resort move, given that the partnership has increased its distribution annually for 22 consecutive years. Moreover, management has taken the long view before, letting the coverage ratio fall below 1 in 2013 and 2014 while it waited for investments to bear fruit.   

BPL Financial Debt to EBITDA (TTM) Chart

BPL FINANCIAL DEBT TO EBITDA (TTM) DATA BY YCHARTS

The partnership is also fairly conservative financially, with a debt-to-EBITDA ratio of around 4.9, which isn’t particularly out of line with its midstream peers or its own history. However, the fear of a distribution cut is a big headwind in an asset class that’s specifically designed to push income through to unit holders, which is why Buckeye’s distribution yield is a massive 14% today.

The partnership doesn’t expect to issue any new units through the end of 2019, which would make it even harder to cover distributions. Although the recent use of hybrid debt and issuance of a new class of units that have a payment in kind distribution (which temporarily allows the partnership to avoid cash distributions on the units) suggests Buckeye is getting aggressive in order to raise non-dilutive cash, management believes that it still has plenty of financing options available should it need additional funds. Buckeye is openly calling 2018 a transition year, with major projects, like expansions in Texas, Chicago, and Michigan/Ohio, not expected to add materially to the top or bottom lines until 2019 or 2020.     

If you can take the long view along with management, Buckeye’s huge yield is worth the risk for investors who can handle a little uncertainty. When coverage picks back up, the market is likely to push the unit price higher.

Top Financial Stocks To Invest In Right Now

The stock market may be experiencing some volatility as it continues to push up against new highs, but that doesn’t mean there aren’t some good values still to be found. A rising market tide lifts all boats, but some stocks are sporting supremely discounted valuations anyway.

Although waiting for a major correction would give you a chance to find more stocks with cheap valuations,here are three companies that are bargains right now.

Top Financial Stocks To Invest In Right Now: Wal-Mart Stores, Inc.(WMT)

 Investors looking for the perfect stock during retirement should aim for a relatively stable company with competitive advantages that’s returning consistent value to shareholders. Few companies can claim to do those things as well as Walmart and over the past decade Walmart has consistently repurchased shares and increased its dividend.

While Walmart’s dividend increases have slowed recently as the company made key acquisitions, its fiscal year 2019 increase to a quarterly $0.52 dividend is still a healthy 2.4% yield. It was the 45th consecutive year the company increased its dividend and during fiscal 2018 the retail juggernaut returned a staggering $14.4 billion to shareholders in the form of dividends and share repurchases – rest assured, Walmart will consistently return value to shareholders.

Walmart has also made smart moves to invest in its future, especially its 2016 Jet.com acquisition and 77% stake in Flipkart in May. Initially, the investing community believed that Walmart vastly overpaid for Jet.com, an unproven e-commerce business, in a desperate attempt to do something with its online sales. It took barely a year for investors to come around to its e-commerce moves, and Morningstar.com estimates Walmart can grow online sales 35% annually to boost online sales from 5% of total sales during fiscal 2018 up to around 15% within three to four years.

With more than 11,700 stores in 28 countries and 2018 revenue of $500 billion, Walmart is a powerhouse in scale, pricing power, and distribution. Don’t be surprised if it’s one of a few, if any, that will challenge Amazon.com with e-commerce and grocery delivery. In the meantime, it will continue to dish massive value to shareholders through dividends and share repurchases.

Top Financial Stocks To Invest In Right Now: Magellan Midstream Partners L.P.(MMP)

Magellan is a large and diversified midstream partnership. While it doesn’t produce oil, it is a vital cog in the oil industry, helping to move the energy source from where it is produced to where it eventually gets used.

The partnership is among the most financially conservative players in the midstream space. Its debt-to-EBITDA ratio is at the low end of the industry and its distribution coverage is currently being targeted at a solid 1.2 times. Add in a business that is over 85% fee-based and the partnership’s generous 5.5% yield looks easily sustainable. That’s the core reason why income investors should like Magellan right now — a large and safe distribution.   

However, the midstream partnership also has plans to spend roughly $1.7 billion on capital projects between 2018 and 2020 (with additional projects waiting in the wings). Most of these projects either have customers lined up or are at facilities where demand indicates a need for expansion. In other words, Magellan is also taking a conservative approach to its growth spending. These capital outlays, meanwhile, should support distribution growth of as much as 8% a year through 2020. 

A little history adds even more allure here. Magellan has increased its distribution every quarter since its IPO — including right through the deep energy downturn that started in mid-2014. Magellan tends to trade at a premium to its peers, but remains around 20% off of the highs it reached when oil prices were peaking. With oil coursing through its midstream veins, Magellan is a name that conservative income investors should be looking at very closely today.   

Top Financial Stocks To Invest In Right Now: Exxon Mobil Corporation(XOM)

The energy sector has seen a lot of volatility in recent years, with oil prices having plunged from triple-digit levels all the way down below the $30-per-barrel market before rebounding convincingly. Yet crude oil hasn’t regained all of its lost ground, and nervousness about the tenuous nature of the energy market’s recovery has left even shareholders in industry stalwart ExxonMobil unconvinced about the industry’s future.

Even as the oil giant’s dividend has continued to rise, share prices at ExxonMobil have dropped, and that’s been enough to give the stock an attractive 4.1% dividend yield right now.

ExxonMobil’s major stumbling block has been that it has had increasing difficulty finding ways to replace production, having fallen behind some of its most prominent rivals in pursuing new lucrative projects. The oil giant has long been an industry leader, and it has the financial capacity and determination to use its position as leverage to get involved in deals that smaller companies can’t afford to pursue. 

It could take a while for ExxonMobil’s earnings results to catch up to its ambitious plans, but eventually, the company is in a good position to make good on its strategic promises to its core investors.

Top Financial Stocks To Invest In Right Now: LGI Homes, Inc.(LGIH)

I’m overgeneralizing a little bit, but most new homes can be lumped into three distinct categories: starter homes, move-ups, and luxury. Most homebuilders will have a blend of these homes in their inventory, a few will focus on the luxury market, but LGI Homes focuses pretty much exclusively on the starter home market and has built its business to specifically cater to the demographics of these customers.

LGI is much more of a no-thrills builder than its peers. It doesn’t offer several premium package options like kitchen or bathroom upgrades or several different architectural designs. Instead, it focuses on a few more cookie-cutter designs that can be built relatively quickly and keep costs down such that LGI can sell more affordable homes. The company also targets land purchases, lot purchases, or lot agreement contracts in places that are away from metro areas but have easy access to highways and are close to retail and employment centers. This buying strategy is also a way to provide a lower price point on entry homes. 

Management also uses a more targeted marketing approach to reach its buyer demographic. It specifically seeks out first-time buyers and renters with its marketing campaigns that offer move-in ready homes that don’t require a down payment and offers them at comparable rates to rentals in the area with the possibility of building equity. It has been an incredibly successful tactic, as new homes sold has increased 10 times over the past decade.

LGI isn’t without flaws. It carries a rather high debt load compared to its peers, and targeting buyers with no down payment might give some investors the chills because of potentially questionable customer creditworthiness. These two things suggest that if we were to see a housing market swoon, LGI Homes could be one of the first to suffer.

The one thing I can say to assuage these concerns is that LGI Homes was one of the few homebuilders to remain profitable every year since 2003, so management has handled a tough market crash before. Also, there is a lot of pent-up demand from millennials putting off their first home purchase, and high housing prices in the conventional markets are likely going to push first-time buyers into these more friendly price-point abodes. With shares of LGI trading at just 10.7 times earnings, LGI stock could be a great pickup.

Top 5 Performing Stocks To Watch For 2019

Here at Zacks, we don’t generally classify stocks as “cheap” or “expensive”, and rather than looking at the stock’s face value, we have a system that puts an emphasis on earnings estimate revisions to find stocks that will hopefully be winners for investors.

That being said, low-priced stocks can be attractive to smaller investors that can’t necessarily afford large stakes in companies with higher priced stocks.

When looking at these low-priced stocks, we can look at the same trends in growth, value, and momentum and apply the Zacks Rank to properly analyze the potential that these companies have. We are also keenly aware of the latest sector trends and make sure to cover all of the hottest industries.

Today we’ve highlighted three stocks that fall into the broad “technology” sector. Each of these three stocks is currently trading for less than $10 per share and holds a Zacks Rank #2 (Buy) or better. Take a look at the strong estimate revision activity and other factors that make these tech companies stick out right now.

Top 5 Performing Stocks To Watch For 2019: Volkswagen Aktiengesellschaft (VLKAY)

Wolfsburg, Germany-based Volkswagen AG (OTCMKTS:VLKAY) manufactures and sells automobiles in Europe, North America, South America, and the Asia Pacific. This Zacks Rank #2 company has a 3-5 years EPS growth rate of 6.2% and a Value Score of A.

Top 5 Performing Stocks To Watch For 2019: Exxon Mobil Corporation(XOM)

Oil giant ExxonMobil (NYSE:XOM) stumbled into 2018 after reporting lackluster results to end last year. Because of that, its stock endured its worst trading day since 2011 only to follow it up the very next one with a similar rout. While it’s started to recover, it’s still down 5% for the year even though oil has improved another 10%. As a matter of fact, Exxon is currently trading at a valuation not seen since the 1980s.

One result of this low valuation is that its dividend yield is now up near 4%, which we haven’t seen since the ’90s. These factors make this month an excellent one to consider buying this oil behemoth for the long haul.

Top 5 Performing Stocks To Watch For 2019: Microsoft Corporation(MSFT)

Microsoft announced that its Windows 10 subscriptions have reached a milestone.

The tech giant said late Tuesday that it now has more than 200 million enterprise workers running Windows 10 as the company has been pushing companies to upgrade from Windows 7. Microsoft said that updates for the older operating system will no longer be supported in about 20 months.

Joe Belfiore, a company corporate vice president who’s at the helm of the Windows 10 team, made the announcement at Microsoft’s Build developers conference. “We’ve seen that [Windows 10] adoption rate increase now at 79% year-over-year growth.”

On Monday, the company added that roughly 700 million devices are now running Windows 10 across the world, with enterprises accounting for slightly less than 30% of all Windows 10 copies.

MSFT stock was also up a fraction of a percentage after Wednesday’s market close.

Top 5 Performing Stocks To Watch For 2019: Baidu Inc.(BIDU)

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He is feeling so encouraged by the company’s outlook that he ramped up his already-bullish price target by $10 to $310. This suggests 22% upside potential. According to Sena, “Baidu’s share currently trades at 24x Adj. 2018E EPS of ¥67.20/$10.59, making it attractive among our Outperform-rated names, particularly when considering the industry leadership it is showing within AI, both as it applies to core (Search, Feed), video, and new initiatives (Apollo, DuerOS).”

Top Oppenheimer analyst Jason Helfstein agrees. He believes Baidu is still undervalued compared to Google, especially when you consider that BIDU is in prime position for the rapid growth of China’s online ad market. “We think key drivers include increasing number of paid clicks, higher conversion rates and higher cost-per-click (CPC). The penetration of smartphones in China, especially in lower tier cities, provides another strong revenue stream for BIDU as it starts to monetize mobile search separately” comments the analyst.

He has a $295 price target on BIDU. Bear in mind that Helfstein’s strong track record on BIDU stock specifically (87% success rate and 21.1% average return per rating) further reinforces the credibility of his latest recommendation.

Top 5 Performing Stocks To Watch For 2019: Manhattan Associates, Inc.(MANH)

Manhattan Associates Inc (NASDAQ:MANH) is up nearly 150% in the past five years, which is a very respectable run.

However, in the past two years it’s off nearly 30% with about half of that happening in the past year. The trend in MANH’s case, at this point, is not your friend.

The problem is, MANH is an SaaS that specializes in supply chain, inventory and omnichannel management for retailers, wholesalers and manufacturers. There has been such a cross pollination in recent years regarding the challenges that can be addressed with software systems, that niche firms, or firms that could do one thing well have to pivot.

Some are making that pivot and others are losing ground. None of its sectors are doing well enough to justify its forward P/E of 30.

Best Cheap Stocks To Invest In 2019

U.S. equities are threatening to break up and out of a multi-month consolidation range with the Dow Jones Industrial Average testing its April high alongside the psychologically important 25,000 level.

Investors have a lot of positives to be encouraged by, including a cooling of long-term interest rate increases, a calming of geopolitical tensions and ongoing labor market strength. Moreover, a calming of inflationary pressures is easing worries about an aggressive pace of Federal Reserve rate hikes this year.

Investors are piling into highly leveraged turnaround plays. Especially in the energy sector. But key technology plays look ready to surge as well, in areas left for dead like electric vehicle charging. Here are some stocks to watch:

Best Cheap Stocks To Invest In 2019: Autodesk, Inc.(ADSK)

This groundbreaking 3D design company makes software for people who make things. This includes software for architects, animators, constructors and engineers. In the last month prices have pulled back by 3.4%. But its growth trajectory is nonetheless very impressive, with prices up 25% year-to-date.

And this is just the beginning according to the Street. In the last three months, Autodesk, Inc. (NASDAQ:ADSK) has received an impressive 13 buy ratings with a $154 average price target (16% upside). Two of these ratings stand out. Top Oppenheimer analyst Koji Ikeda calls ADSK his Top Stock Pick in Saas/ Applications Software. He explains: “Autodesk is a well-established franchise and industry leader and operates as an industry-standard, must-have technology in nearly every industry it operates in.”

Looking forward, Ikeda sees big growth potential as “the business is well positioned in a large but lightly penetrated construction industry that is yearning for next-generation technologies, like Autodesk’s, to help digitize the industry.”

Similarly, five-star Robert W Baird analyst Robert Oliver calls ADSK a “Fresh Pick.” He ramped up his price target from $145 to $155 (20% upside) while praising the company’s strong execution.

Best Cheap Stocks To Invest In 2019: Realty Income Corporation(O)

In the same sense that income-oriented utility stocks make for solid retirement investments, no list of retirement stocks to mull is complete without at least one real estate investment trust (or REIT), which are explicitly designed as tax-efficient ways to deliver rental income to shareholders. And one of the top names in the game is Realty Income Corp (NYSE:O), which owns shopping centers, renting out spaces to retailers.

It seems like a rough business to be in these days, with the so-called “retail apocalypse” upon us, with even the biggest names in the business seeming to close a few more stores than they’ve closed in the past. That worry is a big part of the reason O shares have fallen 22% since their mid-2016 peak.

As it turns out though, Realty Income is handling the headwind better than one might expect. Sales and earnings were up in 2017, and they’re projected to grow again in 2018. The dividend is along for the ride; the REIT boasts 81 consecutive increases in its quarterly payout.

Best Cheap Stocks To Invest In 2019: Exxon Mobil Corporation(XOM)

 It’s true that ExxonMobil shares have been underperforming its peer group in the past year, but in my view, that underperformance is presenting an excellent opportunity for income investors to add this big oil stock to their forever portfolio.

ExxonMobil’s lackluster share price returns are in part due to concern over decelerating production, including a 2% dip in 2017. Declining production isn’t helping the top line, but there’s reason to think that once a few of ExxonMobil’s key projects begin pumping out oil, they’ll be able to more than offset the declines associated with maturing oil.

The project offshore of Guyana, for instance, is a massive one that could generate 500,000 barrels of oil per day, including 120,000 barrels per day as early as 2020. Guyana’s even more attractive because a low $26 per barrel breakeven point means that if oil prices remain anywhere near where they are today, it will be a boon to ExxonMobil’s bottom line.

Other projects, including U.S. shale and offshore Brazil, also offer significant opportunity. Exxon’s Permian Basin and Bakken shale production grew 18% year over year in Q1, and the company has over 2 million net acres offshore of Brazil that could help move the needle in a few years.

It also shouldn’t be ignored that ExxonMobil’s financial results are down from five years ago because of lower oil prices, but oil prices have been climbing this past year, and as a result, the company has an opportunity to leverage the cost-cutting it did during oil’s downturn for higher earnings in the future.

Overall, higher oil prices, the potential for production to grow over time, and a juicy 4.4% dividend yield make ExxonMobil one of my favorite set-it-and-forget-it stocks.

Best Cheap Stocks To Invest In 2019: Cirrus Logic, Inc.(CRUS)

Cirrus Logic, Inc. (NASDAQ:CRUS) is an audio technology company that serves a range of industries including automakers and mobile gadget companies. This includes noise cancellation technology and voice-controlled interfaces for consumer technology.

Founded in 1984, Cirrus Logic has nearly 2,500 patents (and counting) on its best-in-class hardware and software. And considering it boasts existing relationships with gadget giant Apple, it clearly has a respected pedigree.

Of course, with a heavy reliance on Apple to keep its revenue humming, many investors worry Cirrus Logic is a risky play. After all, losing a contract with the Cupertino, California-based giant would cause sales to dry up in a hurry. However, CRUS has increasingly diversified away from Apple-related revenue — including a big win to get one of its chips on the Samsung Galaxy 8 recently. Beyond that, Cirrus is pushing into mid-range smartphones across the board as higher-end hardware is becoming standard even on “entry-level” devices.

The downside risk is very real for Cirrus if it gets completely cut out of the new iPhone ecosystem, but frankly I don’t think that’s likely. Instead, risk-averse investors are likely discounting the stock right now until they have confirmation … and once the “all’s well” sounds, it’s off to the races.

That means now is an ideal time to get into CRUS stock under $45 a share. Recent disappointing results for the iPhone X launch in late 2017 have held back this stock, but an uptick for sales and a renewed upgrade cycle for Apple will surely get Cirrus logic back on track in a big way this year.

Best Cheap Stocks To Invest In 2019: Western Digital Corporation(WDC)

Memory solutions giant Western Digital also reported its latest quarterly results last week. The company notched adjusted earnings of $3.63 per share, comfortably surpassing the Zacks Consensus Estimate of $3.31 per share. WDC also posted revenue of about $5 billion, edging out our consensus estimate of $4.94 billion and improving 7.5% year over year.

Western Digital’s strong results helped relieve some tension in the memory space, with many investors assuming cyclical trends had likely run their course and predicating a pullback soon. Still, the stock has struggled to generate much momentum since its report, indicating that volatility is still lingering.

Nevertheless, an improving earnings outlook has earned the stock a Zacks Rank #1 (Strong Buy).