Judging by the consensus price targets, or where analysts expect share prices to go, U.S. oil companies in various categories with the largest upside potential include supermajor Chevron (NYSE: MHR).
Millions of Americans are expected to travel during the coming Labor Day holiday weekend, encouraged by rising optimism about the economy and by cheaper gasoline prices due to rising U.S. oil production.
Both the U.S. Energy Information Administration (EIA) and the American Petroleum Institute (API) reported a recent decline in U.S. crude inventories, perhaps an effort by oil companies to rein in declining crude prices, but it is unlikely to have any real effect on holiday traffic.
Here is a quick look at how the oil companies mentioned above have fared recently, and what analysts expect going forward.
Among the categories of oil company, expectations are lowest for the super-majors. Analysts see upside of just 6.3 percent from Chevron, and even less from larger rival Exxon Mobil. Chevron's price-to-earnings (P/E) ratio is less than the industry average, but its long-term earnings per share growth forecast is a little more than five percent. Its operating margin is greater than the industry average.
The consensus recommendation of the analysts surveyed by Thomson First Call is to hold shares, though six of the 25 rate the stock as Strong Buy. Shares hit a multiyear high in late July, but they have pulled back almost six percent since. The stock still has outperformed BP and Exxon over the past six months.
See also: 3 Companies Poised To Profit From Mexican Energy Reforms
Cabot Oil & Gas
A move to Cabot's mean price target would represent a 22.2 percent rise in the stock. This Houston-based company has a market cap of more than $13 billion and a dividend yield of just 0.2 percent. The operating margin is better than the industry average, and the return on equity is more than 16 percent.
Of the 33 analysts surveyed, 20 recommend buying shares, with seven of them rating the stock at Strong Buy. Shares have fallen more than 16 percent since the beginning of May but recently found support near $33. Over the past six months, Cabot has underperformed the likes of Chesapeake Energy, Devon Energy and EOG Resources, as well as the S&P 500.
Marathon has a market cap of less than $25 billion and a dividend yield near 1.9 percent. Collectively, analysts see 13.5 percent potential upside for the stock. Its operating margin is better than the industry average, and the return on equity is more than 17 percent. The long-term EPS growth forecast is more than 12 percent.
All but two of the 13 surveyed analysts recommend buying shares, with four of them rating the stock at Strong Buy. The share price is up about 18 percent in the past month, despite pulling back a bit late last week. But the stock has underperformed peers Phillips 66 and Valero Energy in the past six months.
At less than $30 billion in market cap, Baker Hughes is smaller than rivals Halliburton and Schlumberger, but its implied upside is greater at 19.6 percent, compared to 18.3 and 17.7 percent for the others, respectively. The operating margin at Baker Hughes is greater than the industry average, but its return on equity is only around seven percent.
Of the 29 analysts polled, 19 recommend buying shares, with seven of them rating the stock at Strong Buy. Shares are up about 26 percent year-to-date, after hitting a 52-week high in July and retreating more than nine percent since. Over the past six months, Baker Hughes has outperformed the broader markets but underperformed Halliburton and Schlumberger.
See also: U.S. Rig Count Keeps Rising as Natural Gas Drilling Improves
Magnum Hunter Resources
Shares of this Houston-based company saw a steep decline in July, but they have begun to recover since the CFO and three directors bought shares in mid-August. The current mean price target suggests 28.5 percent upside. The market cap is more than $1 billion. Note that both the operating margin and return on equity are in the red, and short interest is more than 13 percent of the float.
Yet, 12 of the 19 analysts recommend buying shares, and that has been the consensus recommendation for at least three months. The share price hit a year-to-date low earlier this month, but it is up more than 12 percent since then. Magnum Hunter has underperformed the broader markets over the past six months.
At the time of this writing, the author had no position in the mentioned equities.
Keep up with all the latest breaking news and trading ideas by following us on Twitter.
© 2014 Benzinga.com. Benzinga does not provide investment advice. All rights reserved.
Stock AnalysisLearn about Coca-Cola's ad spending and why the company has decided to spend the amount of money it does. Understand comparable companies and industries.
InvestingVolatility is likely to resurface as the Federal Reserve gets closer to adjusting its monetary policy stance, even if that adjustment is a measured affair.
EconomicsWe are facing a conundrum with investment implications: Why are wages still stagnant, when jobs are being created at the fastest pace since the late 90's?
InvestingDiverging monetary policy globally and a stronger dollar continued to be key drivers of the recent underperformance and last week’s tumble in U.S. stocks.
EconomicsThe "soft" dry bulk shipping market that confronts shipping companies is a result of lower demand from China, and an excessive amount of bulk ships.
Stock AnalysisWe take a closer look at how Sierra Wireless' transition from 2G to 3G and 4G technologies, has impacted its business today, and the future expectations.
Stock AnalysisARM Holdings highlighted several growth opportunities in its most recent roadshow presentation. Here are three of the large opportunities it talked about.
Stock AnalysisThe energy boom in the U.S. has opened up a huge range of opportunities in the oil and gas industry.
Stock AnalysisCostco has been one of America's most successful companies: It's growing, efficient, profitable and its long-term shareholders have benefited a windfall.
Stock AnalysisDividend investors know that real estate investment trusts with REITs that invest in mortgage-backed securities produce double-digit dividend yields.
An alternative investment theory to Efficient Market Hypothesis ...
New orders for U.S. core durable goods, which are the total durable ...
One of the best-known sources of financial information on the ...
The market's ability to sustain relatively large market orders ...
The difference between the number of stocks that closed higher ...
A system that gathers and compiles the different estimates made ...
An industry agency council was established by the World Economic Forum in 2014 to serve as an advisory board on the future ... Read Full Answer >>
The railroads sector is comprised of publicly traded stocks for companies that operate railroad tracks and/or trains. Railroad ... Read Full Answer >>
Biotech giant Amgen Inc (AMGN) bills itself as one of the first biotechnology firms. It was founded in 1980 and has grown ... Read Full Answer >>
Back in late August 2012, Apple’s (AAPL) stock price reached nearly $700 per share. The stock has since split but has yet ... Read Full Answer >>