A worker on a Nabors Industries drill rig near Midland, Texas.
Daniel Acker/BloombergEnergy stocks have reversed their momentum in 2021, leading the market higher after trailing throughout 2020. An energy subindex of the S&P 1500 is up more than 11% this year.
But some energy names have trailed the pack. Those stocks could be in for gains if investors look to buy laggards with the potential to catch up.
Barron’s screened for energy stocks in the index that have gained less than 5% this year even though they are projected to produce positive free cash flow in 2021. Five stocks made the cut.
Energy Companies Left Behind
These five energy companies have missed the 2021 rally despite expectations of positive free cash flow in 2021
Source: Factset
Dorian LPG (ticker: LPG) is a shipping company that transports liquefied petroleum gas around the world. The price of LPG, mostly used to heat homes, had been rising earlier in the year because of a shortage. The stock initially spiked, but it has since come back down.
Halliburton (HAL), the largest U.S. shale-drilling service company, has fluctuated in the past week after posting better-than-expected earnings. The company is dealing with reduced drilling activity in the U.S., and has cut its workforce. But some analysts think the company is in good shape for a rebound later this year in U.S. drilling.
Murphy Oil (MUR) is an oil and gas producer with significant holdings in the Gulf of Mexico. Its stock has been hurt by a moratorium on new permits in the Gulf imposed by the Biden administration. Some analysts believe, though, that the moratorium will not lead to a longer-term ban.
Nabors Industries (NBR), a drilling contractor based in Houston, has some overseas operations that could shield it from a downturn in U.S. oil, but its leverage worries some analysts. Its debt is why “we remain on the sidelines,” wrote Credit Suisse’s Jacob Lundberg in November.
NOV (NOV), an oil-equipment provider that used to be called National Oilwell Varco, has also struggled because of worries that the oil rally is faltering.
Write to Avi Salzman at avi.salzman@barrons.com
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January 26, 2021 at 05:12AM
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5 Energy Stocks That Have Been Left Behind - Barron's
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