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Energy Stocks On Sale?

Published: Monday, 11 Aug 2008 | 9:22 PM ET
Text Size
By: Lee Brodie
Web Editor

The sharp drop in oil and natural gas prices has produced an even sharper pullback in energy stocks, creating what may be one of the best buying opportunities in the sector in several years, according to an article in the August 11 edition of Barron's.

Energy issues have rarely been so inexpensive, relative to oil and gas prices, estimated asset values and earnings, said the report, while adding that barring a collapse in oil and gas, most energy stocks could easily rise 25 percent or more over the next year.

Exxon Mobil [XOM  Loading...      ()   ], ConocoPhillips [COP  Loading...      ()   ], Chevron [CVX  Loading...      ()   ] and BP [BP  Loading...      ()   ] now fetch five to seven times next year's projected profits and these energy giants have rarely had such low price to earnings ratios, said the article in the weekly financial publication.

The article contends that though oil and natural gas prices have dropped in recent weeks, the stocks are discounting a drop in crude oil and natural gas that is well below current levels.

How should you play?

Guy Adami

My best trade is XTO Energy[XTO  Loading...      ()   ] . “The stock is down 30% since the end of June and valuations look okay,” he says. Other trades Adami likes include Schlumberger [SLB  Loading...      ()   ] and Exxon Mobil.

Karen Finerman

I’m long Pride [PDE  Loading...      ()   ], Transocean [RIG  Loading...      ()   ] and Flowserve [FLS  Loading...      ()   ], she says.

Pete Najarian

I like many of the stock mentioned above, he says. Look at ConocoPhillips and Exxon Mobil as well as BP.

Jeff Macke

In energy I’d duck and cover and treat them all like they’re broken, he says. However I like Potash [POT  Loading...      ()   ] at $150, Arch Coal [ACI  Loading...      ()   ] at $40 and Agrium [AGU  Loading...      ()   ] at $60.

















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Trader disclosure: On Aug 11, 2008, the following stocks and commodities mentioned or intended to be mentioned on CNBC’s Fast Money were owned by the Fast Money traders; Macke Owns (COST), (MSFT), (WMT), ( TM) (UUP); Adami Owns (C), (AGU), (GS), (BTU), (INTC), (MSFT), (NUE); Pete Najarian Owns (AAPL), (COST), (HD), (TSO); Pete Najarian Owns (CSCO) Calls, (INTC) Calls, (MRVL) Calls; Pete Najarian Owns (HCBK) Puts; Finerman Owns (GS); Finerman's Firm And Finerman Own (FLS), (PDE); Finerman's Firm Owns (JCP), (MSFT), (SUN), (TSO), (VLO), (RIG), (NOK); Finerman's Firm And Finerman Own (C) Leap; Finerman's Firm Is Short (XLF), (BBT), (COF), (IYR), (IJR), (MDY), (IWM), (SPY); Finerman's Firm And Finerman Own (ANF), Finerman's Firm Owns (ANF) Call Spreads; Finerman's Firm Is Short British Pound; Finerman's Firm Is Short (RTH); NBC Universal Is The Parent Company Of CNBC

© 2012 CNBC
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