5 Energy Stocks: Values Or Traps?

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It’s time to look at the energy stocks again. After being the best-performing sector in the S&P 500 two years in a row, they are now the worst-performing sector this year.

Crude and natural gas prices have sunk from last year’s highs after the Ukraine War spooked the market. Traders have abandoned the stocks again for better-performing semiconductors and AI stocks.

But with Wall Street ignoring energy, the stocks are again cheap.

But are they true values or traps?

Difference Between a Value and a Trap

Remember, there is a difference between value stocks and those that are value traps. The key is to look at earnings.

Are the earnings expected to rise year-over-year? If so, then there might be a true value there. Investors are getting rising earnings on sale. A trap is when the earnings are on the decline.

5 Energy Stocks: Values or Traps?

SLB (SLB - Free Report)

SLB, formerly known as Schlumberger, is a global oil services company. The services business is not as tied to the daily price movements of oil and natural gas.

SLB shares have sunk in 2023, falling 19.3%. It’s gotten cheaper. SLB trades with a forward P/E of 14.7. It also has a PEG of 0.5. A PEG ratio under 1.0 indicates a company is both a value and has growth.

Is SLB a value or a trap?

NexTier Oilfield Solutions Inc. (NEX - Free Report)

NexTier Oilfield Solutions is a small cap services company, with a market cap of $1.8 billion.

Shares of NexTier Oilfield Solutions have sunk in 2023. It’s down 14.2% year-to-date. And now it’s dirt cheap. NexTier Oilfield Solutions has a forward P/E of just 2.8.

How much cheaper can NexTier Oilfield Services get?

EOG Resources, Inc. (EOG - Free Report)

EOG Resources is one of the big independent oil and natural gas producers. Shares of EOG Resources are down 15.4% year-to-date but are not yet at the 2023 lows that were hit in March.

Still, EOG Resources is cheap with a forward P/E of 9 and a PEG ratio of just 0.3. It has both value and growth. Analysts have had a tough time with earnings estimates this year as crude and natural gas prices have dropped. 4 estimates are up and 7 have been cut in the last 30 days.

Is EOG Resources a value or a trap?

Occidental Petroleum Corp. (OXY - Free Report)

Occidental Petroleum is a large cap oil and natural gas producer who also is a big chemical producer. It’s been in the public eye the last few years as Berkshire Hathaway has taken a large position in the company. In 2023, Warren Buffett continued to add to his position.

Shares of Occidental Petroleum have fallen 6.4% year-to-date but are up off the 2023 lows. Occidental Petroleum is cheap. It has a forward P/E of 11.4 and a PEG ratio of 0.5. Analysts are bearish on 2023, with 8 earnings estimates cut and only 1 estimate raised in the last 30 days.

Is Buffett getting it right on Occidental Petroleum?

Exxon Mobil Corp. (XOM - Free Report)

Exxon Mobil is a big, integrated oil company with exploration and production, refining, distribution, service stations and chemicals. Exxon Mobil is one of the largest operators in Guyana.

Shares of Exxon Mobil are down 5.4% in 2023. Still, the shares are cheap with a forward P/E of 10.9 and a PEG ratio of 0.6. Exxon Mobil also pays a dividend, yielding 3.5%.

Analysts are bearish, however, with just 1 estimate revised higher in the last 30 days, and 5 estimates revised lower.

Is Exxon Mobil a value or a trap?

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