5 Value Oil Stocks To Buy As Sector Outlook Improves

Further, the sector has exhibited strong earnings performances since the middle of 2016. Surging oil prices and a strong global economy are primarily responsible for earnings growth of this degree. Yet, prices largely lag earnings growth.

Also, for the first quarter, energy sector earnings are expected to be up +60.8% from the same period last year on +15.7% higher revenues. Excluding the Energy sector, total S&P 500 earnings growth drops from +15.8% to +14.4%. 

Fresh Geopolitical Risks Emerge

Oil prices hovered around the $70 per barrel mark on Tuesday, supported by simmering tensions in the Middle East. On Sunday, Saudi forces shot down ballistic missiles launched by Iran-backed Houthi militants. Some of these missiles had been aimed at the Saudi capital city of Riyadh.

Meanwhile, the United States has indicated on several occasions that it may withdraw from its nuclear pact with Iran. In such an event, the United States is likely to impose fresh sanctions on Iran which will impede oil exports. Trump’s decision to name John Bolton, a hawkish figure, as his new national security adviser has heightened such concerns.

Our Choices

Oil stocks held their ground last week even as other sectors crumbled in the face of trade war-related tensions. Exceptional earnings growth and impressive valuations have also raised the attractiveness of the sector. Meanwhile, analysts at Goldman think that the sector is entering a phase of restraint, characterized by strong performance.

Adding select value stocks from the sector to your portfolios looks like a good option at this timeOur selection is also backed by a good Zacks Value Score and Zacks Rank.

We narrowed down our choices with the help of our new style score system.

Our research shows that stocks with a Value Style Score of A or B when combined with a Zacks Rank #1 (Strong Buy) or 2 (Buy) offer the best opportunities in the value-investing space.

Bonanza Creek Energy, Inc. (BCEI - Free Report) is engaged in the acquisition, exploration and development of onshore oil and natural gas properties in the United States.

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