Here Are Four Ways to Play High Gas Prices: Analyst
Gasoline prices are rising, currently averaging $3.72 a gallon. That means there’s opportunity for investors in drilling and refinery company stocks, Sterne Agee analyst Tim Rezvan told CNBC Monday.
He said his four stock picks — two large-cap companies and two smaller ones — are up about 40 percent and still have “a lot of upside.”
On the large-cap side are Occidental Petroleumand Pioneer Natural Resources. Oxy Pete has “a good diversified portfolio” of both low-risk and high-risk projects in a number of places around the world, including the Middle East. “It’s a huge cash-flow generator,” Rezvan said.
Pioneer has a “strong cash flow visibility from a good hedge portfolio,” he added. “They’re in a few high-profile basins in Texas,” specifically the Eagle Ford Shale and Permian basin fields.
One of his smaller picks, Gulfport Energy, has “one of the highest exposures to the Utica Shale in Ohio, a really up-and-coming gas play there,” he said. The company has “a clean balance sheet and it has some noncore assets they can monetize over the next couple of years.”
The final pick, Berry Petroleum, is a diversified offshore oil producer with large steamflooding oil operation in California, he said.
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Disclosure information was not available for Tim Rezvan or his company.