Since providing his list of top stocks to watch in April 2020, Rich has been focusing a lot on oil and gas. Ever since OPEC and Russia started an oil price war in early March, the sector has plunged into chaos. While this might give existing oil investors a stomach ulcer, it opens the door for plenty of new investors to enter at record-low prices. That’s why Rich is breaking down some of the top oil stocks to buy or watch today.
“The rest of the market is up right now, but oil is down big. It’s down to like $25 right now,” he says. “I do believe oil’s going to go way, way higher—even if it goes a little lower at first, the upside from here is crazy.”
Let’s break down the biggest news affecting the oil sector today, and profile some stocks to keep your portfolio gassed up.
Oil Stocks Fell Further Today, but the Upside is Looking Good
Earlier today, Saudi Arabia—the primary power behind OPEC—and Russia delayed a scheduled meeting. The meeting was to discuss output cuts that would likely help reduce global oversupply. This is an exceptionally important issue now, as the coronavirus pandemic continues to limit demand.
“The excitement for the meeting has now turned to negativity,” Rich explains. “The price of oil shot back down as a result.”
Rich goes on to say that this presents investors with a great buying opportunity. With crude oil currently at an 18-year low, investors will likely flock to the sector quickly. This, in turn, will drive the price of oil back up, meaning anyone perusing a list of oil stocks to buy should act quickly if they want to take advantage of low prices.
To understand just how significant the oversupply problem currently is, there are reports that companies are running out of space to store oil. Specifically, storage facilities, refineries, terminals, ships, and pipelines are approaching capacity. According to Goldman Sachs, that kind of oil glut hasn’t happened since 1998.
Oil Stocks to Buy Today
While Rich remains tight-lipped on the oil stocks he’s purchased, others are making their picks widely known. Writing for the Motley Fool, Jason Hall recommends Phillips 66 (NYSE:PSX), as it isn’t actually involved in producing oil. Along with the company’s strong balance sheet, Hall says that PSX has “the right kinds of operations to avoid the worst of the downturn” and can even find ways to profit.
Of course, when a sector gets turbulent, many investors will find shelter among the blue chip stocks. That means oil’s biggest names, ExxonMobil (NYSE:XOM), will likely see value added. Even as these companies potentially cut their outlook for the year, the investing community tends to have faith that the big corporations will eventually get back on track.
Finally, Enterprise Products Partners (NYSE:EPD) is a midstream limited partnership with a portfolio that’s perfect for a downturn like this. The last time oil prices dropped below $30, EPD didn’t have to cut pay or distribution. Plus, it has a financial debt to EBITDA ratio of around 3.4 times, making it one of the most conservative spenders in the space.
What do you think? Are you planning to take a position in any of these oil stocks to buy? Is this sector ripe for opportunity, or will it continue down from here? Let us know your thoughts!
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