Oil prices rallied on Wednesday to trade above $70 a barrel, representing a 32-month high. This can be attributed primarily to rising demand as the global economic recovery drives a revival of industrial activities and mobility. Continued supply cuts by the world’s largest oil producers are also supporting the rally…
Because OPEC and its non-OPEC partners recently confirmed that they will ease production cuts gradually, oil prices should continue rallying. Based on this, and a strengthening demand outlook, analysts expect oil prices to hit $80 a barrel or more this summer. Investors’ interest in this sector is evident in the SPDR S&P Oil & Gas Exploration & Production ETF’s (XOP) 12.8% gains over the past month compared to SPDR S&P 500 Trust ETF’s (SPY) 0.1% loss.
So, we think it could be wise to buy shares of Canadian Natural Resources Limited (CNQ – Get Rating), Ovintiv Inc. (OVV – Get Rating), Whiting Petroleum Corporation (WLL – Get Rating), and Vermilion Energy Inc. (VET – Get Rating) because they are expected to benefit significantly from the rising oil prices.
Headquartered in Calgary, Canada, CNQ explores, develops, markets, and produces crude oil, natural gas and natural gas liquids (NGLs). The company’s segments include oil sands mining and upgrading, and midstream and refining.
CNQ’s product sales increased 50.9% year-over-year to CAD7.02 billion ($5.80 billion) for the first quarter, ended March 31, 2021. The company’s crude oil and NGLs’ sales from North America came in at CAD3.10 billion ($2.56 billion), up 67.3% year-over-year. Its net income was CAD1.38 billion ($1.14 billion) compared to a CAD1.28 billion ($1.06 billion) net loss in the prior-year period. Its EPS came in at CAD1.16 ($0.96) compared to loss per share of CAD1.08 ($0.89) in the year-ago period.
Analysts expect CNQ’s EPS to increase 1,081.9% year-over-year to $1 for the quarter ending September 30, 2021. It surpassed the consensus estimate in each of the trailing four quarters. Its annual revenue is expected to increase 59.8% year-over-year to $21.31 billion in fiscal 2021.
The company declared a CAD0.47 ($0.39) quarterly cash dividend, payable on July 5, 2021. CNQ has consistently paid dividends over the past 19 years. The stock has gained 104.3% over the past nine months to close yesterday’s trading session at $37.03.
It’s no surprise that CNQ has an overall B rating, which equates to Buy in our POWR Ratings system. The POWR Ratings assess stocks by 118 different factors, each with its own weighting.
The stock has an A grade for Growth, Sentiment, and Momentum, and a B grade for Quality. Click here to see CNQ’s ratings for Stability and Value as well.
CNQ is ranked #3 of 51 stocks in the B-rated Foreign Oil & Gas industry.
OVV is a resource company that is focused on developing its multi-basin portfolio of oil and natural gas assets located across the United States and Canada. The company operates through segments that include Canadian operations, USA operations and market optimization.
For the first quarter, ended March 31, 2021, OVV’s product and services revenues came in at $2.25 billion, which represents a 43.1% year-over-year rise. The company’s non-GAAP operating income was $293 million, up 985.2% year-over year. It’s non-GAAP cash flow increased 66.4% year-over-year to $890 million.
For the current quarter, ending June 30, 2021, analysts expect OVV’s EPS and revenue to increase 332.6% and 37.8%, respectively, year-over-year to $1.00 and $1.71 billion. It surpassed consensus EPS estimates in each l of the trailing four quarters.
On May 19, 2021, OVV closed its…
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