Friday, October 17, 2014

What is on my watchlist this month: oil oil oil

October has been a bad month for many stocks in the S&P500. This provides us with an opportunity to add positions to great companies at decent valuations. The energy sector in particular is incredibly hard hit the last couple of weeks due to falling crude oil prices. I think this provides us with a great opportunity for dividend champions such as Chevron, Exxon, and ConocoPhillips.

In addition to falling oil prices, several industrial sector names have fallen to attractive price valuations in my eyes. These names include UTX and MMM.

Below are several graphs showing stocks that are high in my watchlist for purchase this month.

At the moment, the current plan I am thinking is to add to the following positions in the coming months:

  • CVX: $1000
  • XOM: $2000
  • COP or BP: $1000 (most likely will be COP)

Energy Forward PE PE Yield PEG Beta
CVX 10.29 10.6 3.85% 1.85 1.15
XOM 12.06 11.54 3.05% 2.98 0.9
COP 10.48 10.31 4.36% 1.39 1.1
BP 8.63 11.1 5.75% 1.34 1.91

Currently CVX and COP look cheap on a PE basis and both have dividends higher than my 3.5% target. BP has a very high yield with good looking valuations. In terms of volatility I will still prefer XOM, COP, and CVX over BP. BP is a riskier play especially after the oil spill. The PEG is attractive in CVX, COP and BP.

1-yr 3-yr 5-yr 10-yr
CVX 11.1 11.2 9.0 10.6
XOM 12.8 12.2 9.7 9.6
COP 15.5 17.7 13.3 15.7
BP 9.2 12.0 cut divs cut divs

BP has cut its dividend in the past which makes me hesitant to buy it. CVX and XOM are dividend aristocrats so it's business as usual. It is quite impressive that they have maintained around 10% of annual dividend growth continuously. COP offers the highest dividend growth which makes it attractive. COP also has the highest yield out of the three dividend payers. COP has been paying dividends continuously for 14 years. I am not impressed by BP's dividend growth and history. That may be because BP already has a high yield.

Energy: CVX (high priority)

Energy: XOM (high priority)

Energy: COP (medium priority)

Energy: BP (low priority)

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