Friday, March 11, 2016

The Key to Oil Stocks?

The energy sector has been suffering badly in the stock market lately, driven down by the plummeting price of oil. But the web site MarketWatch has found some exceptions to that rule: oil-related stocks that carry very little debt.

The site took the 67 companies in the S&P 500 energy and materials sectors chose the 10  with the lowest levels of debt to equity as of September 30. The idea was that those companies could survive a period of weak profits, and be ready to increase capital spending, acquire weaker competitors or scoop up production assets on the cheap before prices eventually rebound, as they always do.

And they have performed well. Over the past two months, eight of those ten stocks have shown positive returns, a big surprise given they are all oil-dependent. The biggest winners are Helmerich & Payne, up 29 percent, and ExxonMobil, up 12 percent. The only losers in the group were Marathon and Valero.

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