In our Big Money '07 series we're looking to energize your portfolio-- literally-- as we look at the best ways for investors to make money in the energy sector. On "Morning Call" two guests give their stock "picks." Fadel Gheit is Senior Energy Analyst with Oppenheimer & Company and Bob Morris is oil and gas analyst with Bank of American Securities.
Here are Gheit's recommendations:
BP :Gheit says this stock underperformed its peers for the last 12-18 months. They've had a streak of bad luck--but Gheit says that will change--with a major buy back of stock or a merger with Shell.
Murphy Oil : another underperformer according to Gheit. It was hit hard by Katrina. Gheit says Murphy will start to increase production--up 80% over the next two years or so.
Valero Energy : this is the largest oil refiner in the U.S. but underperformed the S&P this year. Gheit is expecting 10-20% upside in 2007 on the stock.
Andarko Petroleum : this refineryis undergoing a massive restructuring and has a very strong track record according to Gheit. They are trying to bring down a large debt--to a reasonable level.
Morris likes these stocks:
Apache Corp : Morris says this company was a little less affected by the warm weather in parts of the U.S. He says it has a strong balance sheet and has made some good acquisitions.
Southwestern Energy : Morris says this stock has significant upside and the fundamentals for natural gas are strong overall.
XTO Energy : this stock continues to put up best returns says Morris and has very good production growth going forward.
Morris also likes EOG Resources.
FYI: 2006 saw a lot of interest in the alternative energy markets--and 2007 could see venture capitalists putting money in. The interest stemmed from rising oil prices and Hurricane Katrina.