Best of the Week
Most Popular
1. Climate Change Mass Extinction - Birds, Bees and Bugs: Going Going Gone - Richard_Mills
2.A Purrrfect Gold Price Setup! - Peter_Degraaf
3.Who Finances America's Borrowing? Recession Indicator for Independent Thinkers Part 2 - F_F_Wiley
4.America’s One-sided Domestic Financial War - Raymond_Matison
5.Gold Price Summer Doldrums - Zeal_LLC
6.Two Key Events Will Unleash Gold - Jim_Willie_CB
7.Billionaire Schools Teacher in NAFTA Trade Talks - Richard_Mills
8.Get Out Of Crypto Cannabis Bubble Before It Pops and Move Into Bargain Basement Miners - Jeb_Handwerger
9.Stock Market Could Pullback for 1-2 weeks, But Medium Term Bullish - Troy_Bombardia
10.G7 Chaos, Central Banks and US Fed Will Drive Stock Prices This Week - Chris_Vermeulen
Last 7 days
Financial Markets Analysis and Trend Forecasts 2018 - A Message from Nadeem Walayat - 21st Jun 18
SPX Bouncing Above Support - 21st Jun 18
Things You Need To Know If You Want To Invest In Bitcoin Now - 21st Jun 18
The NASDAQ’s Outperformance vs. the Dow is Very Bullish - 21st Jun 18
Warning All Investors: Global Stock Market Are Shifting Away From US Price Correlation - 20th Jun 18
Gold GLD ETF Update… Breakdown ? - 20th Jun 18
Short-term Turnaround in Bitcoin Might Not Be What You Think - 19th Jun 18
Stock Market’s Short Term Downside Will be Limited - 19th Jun 18
Natural Gas Setup for 32% Move in UGAZ Fund - 19th Jun 18
Magnus Collective To Empower Automation And Artificial Intelligence - 19th Jun 18
Trump A Bull in a China Shop - 19th Jun 18
Minor Car Accident! What Happens After You Report Your Accident to Your Insurer - 19th Jun 18
US Majors Flush Out A Major Pivot Low and What’s Next - 18th Jun 18
Cocoa Commodities Trading Analysis - 18th Jun 18
Stock Market Consolidating in an Uptrend - 18th Jun 18
Russell Has Gone Up 7 Weeks in a Row. EXTREMELY Bullish for Stocks - 18th Jun 18
What Happens Next to Stocks when Tech Massively Outperforms Utilities and Consumer Staples - 18th Jun 18
The Trillion Dollar Market You’ve Never Heard Of - 18th Jun 18
The Corruption of Capitalism - 17th Jun 18
North Korea, Trade Wars, Precious Metals and Bitcoin - 17th Jun 18
Climate Change and Fish Stocks – Burning Oxygen! - 17th Jun 18
A $1,180 Ticket to NEW Trading Opportunities, FREE! - 16th Jun 18
Gold Bullish on Fed Interest Rate Hike - 16th Jun 18
Respite for Bitcoin Traders Might Be Deceptive - 16th Jun 18
The Euro Crashed Yesterday. Bearish for Euro and Bullish for USD - 15th Jun 18
Inflation Trade, in Progress Since Gold Kicked it Off - 15th Jun 18
Can Saudi Arabia Prevent The Next Oil Shock? - 15th Jun 18
The Biggest Online Gambling Companies - 15th Jun 18
Powell's Excess Reserve Change and Gold - 15th Jun 18
Is This a Big Sign of a Big Stock Market Turn? - 15th Jun 18
Will Italy Sink the EU and Boost Gold? - 15th Jun 18
Bumper Crash! Land Rover Discovery Sport vs Audi - 15th Jun 18
Stock Market Topping Pattern or Just Pause Before Going Higher? - 14th Jun 18
Is the ECB Ending QE a Good Thing? Markets Think So - 14th Jun 18
Yield Curve Continues to Flatten. A Bullish Sign for the Stock Market - 14th Jun 18
How Online Gambling has Impacted the Economy - 14th Jun 18
Crude Oil Price Targeting $58 ppb Before Finding Support - 14th Jun 18
Stock Market Near Another Top? - 14th Jun 18
Thorpe Park REAL Walking Dead Living Nightmare Zombie Car Park Ride Experience! - 14th Jun 18

Market Oracle FREE Newsletter

5 "Tells" that the Stock Markets Are About to Reverse

Stock Market Leadership In 2018 To Come From Oil & Gas

Stock-Markets / Oil Companies Jan 13, 2018 - 12:17 PM GMT

By: WMA

Stock-Markets The thirty-three (33) Oil & Gas companies of the S&P 500 will lead that important benchmark, maybe not during January, but through 2018 and beyond. The reason is simple. It’s all about revenue, cash flow and earnings growth on account of higher Crude Oil prices, rising to the level where this crucially important industry is now achieving sustainable economics.

The Oil narrative is changing. No longer is the industry full of doom and gloom.

Investors who study a company’s fundamentals before taking positions in stocks got on board early. Trend followers have now gotten the message and are becoming invested. At some point this year, the public will follow. Oil stocks will lead the S&P 500 by the end of 1Q2018. 


The broad issue to consider at present is why is investor sentiment changing 180 degrees to now favoring Energy.

For starters, the World Bank is estimating that the global economy is growing now at +3.1% annually. Rapidly growing economies need increasing amounts of Oil. Since 2014, however, producers of Oil severely held back their capital expenditures for exploration and development, to unsustainably low levels. So, with demand on the rise and supply being constrained, especially with production cuts agreed by OPEC + Russia, at some point the $WTI and Brent Oil prices had to rise. They have been since the summer of 2017, doubling to the $63-$69 level, which is now impacting corporate operating results quite significantly.

We know that as the S&P 500 rises, the leaders are always winners while the laggards could be losers unless new money is brought to the table during periods of monetary expansion, in which case even laggards can be winners as witnessed since early 2009. As we say, a rising tide floats all boats.

However, we are now wary because the highly favorable market conditions experienced since 2009 are unlikely to continue. That’s because G-20 central banks are now in a monetary contraction cycle and we expect them to remain so through 2018-2020. Policy reversals of this extent require a radical change in our thinking. The squiggly line era of blindly chasing momentum stocks is over, replaced by analysis of the factors that truly drive market prices, which happen to be corporate fundamentals.

From consensus earnings estimates, it appears that S&P 500 components will grow their earnings +13.7% in 2018 over 2017 and +9.5% in 2019 over 2018. The Dow 30 companies are projected to grow earnings by +11.4% this year. The public is impressed. The broad market indexes are rising.

However, the S&P 500 figures include the 33 Oil & Gas companies that are expected to grow their earnings by an average +65.5% and +25.6% respectively, which is significantly better than the rest. Therein lies the important story

S&P 500 Energy Name

Ticker

WMA Score out of 3734

WMA Rank in list

Consensus EPS estimate for 2017

Consensus EPS estimate for 2018

Consensus EPS estimate for 2019

Expected EPS increase 2018/2018

Expected EPS increase 2019/2018

Andeavor

ANDV

26

1

$6.88

$9.18

$10.54

33.4%

14.8%

EOG Resources Inc.

EOG

46

2

$0.87

$2.20

$3.35

152.9%

52.3%

Halliburton Co.

HAL

96

3

$1.17

$2.16

$2.89

84.6%

33.8%

Occidental Petroleum Corp.

OXY

142

4

$0.84

$1.78

$2.12

111.9%

19.1%

Phillips 66

PSX

184

5

$4.45

$6.68

$7.29

50.1%

9.1%

Marathon Petroleum Corp.

MPC

196

6

$3.84

$4.63

$4.98

20.6%

7.6%

Cimarex Energy Co.

XEC

230

7

$4.50

$6.19

$7.82

37.6%

26.3%

ConocoPhillips

COP

275

8

$0.59

$1.87

$2.37

216.9%

26.7%

Chevron Corp.

CVX

337

9

$4.21

$5.59

$6.14

32.8%

9.8%

Apache Corp.

APA

388

10

$0.12

$0.86

$0.90

616.7%

4.7%

Cabot Oil & Gas Corp.

COG

482

11

$0.52

$0.96

$1.37

84.6%

42.7%

Pioneer Natural Resources Co.

PXD

569

12

$1.68

$3.62

$5.39

115.5%

48.9%

Marathon Oil Corp.

MRO

590

13

-$0.37

-$0.03

$0.07

-91.9%

-333.3%

Newfield Exploration Co.

NFX

645

14

$2.13

$2.80

$3.73

31.5%

33.2%

Valero Energy Corp.

VLO

651

15

$4.93

$6.69

$7.23

35.7%

8.1%

Devon Energy Corp.

DVN

778

16

$1.81

$2.46

$2.91

35.9%

18.3%

Concho Resources Inc.

CXO

793

17

$1.90

$2.57

$3.80

35.3%

47.9%

Exxon Mobil Corp.

XOM

903


© 2005-2018 http://www.MarketOracle.co.uk - The Market Oracle is a FREE Daily Financial Markets Analysis & Forecasting online publication.


Post Comment

Only logged in users are allowed to post comments. Register/ Log in

6 Critical Money Making Rules