7/18/2014 9:45 PM ET
Oil and gas stocks among 10 picks to watch
StockScouter's latest list of recommended stocks is gushing with energy producers to suit all types of investors.
Compiled from StockScouter ratings by Verus Analytics
Escalating global tensions and new legislation in the U.S. could fuel gains in the shares of some energy producers.
As violence in the Ukraine has heightened between Ukrainian troops and pro-Russian rebels, the United States this past week issued sanctions against Russia's largest oil company, Rosneft, and its second-largest natural gas producer, Novatek. While Russia indicated there would be no disruptions to production, it still rattled energy markets: Rosneft by itself accounts for 4 percent of the world's oil supply, according to the Associated Press.
And that was before a Malaysian Airlines passenger jet was shot down over Ukrainian airspace Thursday, killing all 298 people on board. While it’s not yet known who shot down the plane, the White House said Friday it believes Russian-backed separatists in Ukraine were responsible, and called for a ceasefire in the region.
Meanwhile, the Obama administration has opened up the Eastern Seaboard to oil and gas exploration for the first time in decades.
In the wake of these developments, StockScouter's latest list of 10 recommended stocks is gushing with energy producers to suit all types of investors. There's Seadrill (SDRL), an offshore driller that spews an enormous 10.5 percent yield. Ultra Petroleum (UPL) is a natural gas giant that has been making inroads in the oil industry. There's Big Oil dividend stalwart Conoco Phillips (COP). And for bargain buyers, small-cap Hercules Offshore (HERO) trades for just $4, though it is currently unprofitable.
SeaDrill and Ultra Petroleum both get a '10' from the StockScouter rating system on MSN Money, the highest score possible. Based on StockScouter's analysis, shares of SDRL and UPL are both expected to significantly outperform the market over the next six months with average risk or lower.
StockScouter Top 10 for July 18
Seadrill Ltd (SDRL)
Ultra Petroleum (UPL)
Oil and gas
Oil and gas
Hercules Offshore (HERO)
Kodiak Oil & Gas (KOG)
Oil and gas
Activision Blizzard (ATVI)
StockScouter beats the market
We think the StockScouter rating system developed by Verus Analytics for MSN Money is one of the best tools you can use when you're trying to decide where to invest.
StockScouter looks for stocks whose business fundamentals, price behavior, valuation and stock-ownership characteristics appear to predict a rising price in the future, based on how those factors have influenced stock prices in the past.
The system assigns each stock an expected six-month return and balances that return against the stock's expected volatility.
Scouter rates stocks on a scale of 1 to 10, and ratings can change daily. Ratings and data in the chart above were current as of this article's publication date.
In addition to the daily top 10 list described above, StockScouter is used by investment research firm Verus Analytics (previously known as the quantitative business unit of Gradient Analytics) to generate a monthly benchmark portfolio of stocks that, refreshed monthly, has outperformed the market since its inception in August 2001.
An investor who began in 2001 by investing in each of the benchmark portfolio's top 10 stocks at the start of the month, selling them at the end of the month and then starting fresh with a new group of 10 stocks, would have generated returns, before trading costs and taxes, of 1,084 percent through June 30, 2014.
Writer Jon Markman, at the time a columnist for MSN Money, collaborated with company researchers on the tool.
Markman suggested rolling over the top 10 stocks every six months to hold down trading costs, a strategy that might be a better fit for most investors; that would yield different results, which would vary based on your starting point.
Performance through June 30, 2014
Full 50 position portfolio
Top 10 portfolio
Inception: August 2001
VIDEO ON MSN MONEY
I think there a lot of factors at play with analysts.
Some recommend stocks which to an experienced long term more or less buy and hold investor look like stupid or crazy picks. So then some suggest the analysts are "manipulating" or "playing sucker switch" or whatever. But many times the analyst just has a different investment style. You might be a fundamentals conservative investor but the analysts is just making a momentum play. That does not make the pick a sucker play or a manipulation.
Most analysts recommend Microsoft, but I as a conservative investor see more downside in the fundamentals. Does that mean the analysts are trying to play me? no, it just means they think Microsoft is a pretty save if not boring and slow growing stock.
I think Apple is a dangerous play. If Apple does not continue to come out with new meaningful products it is in trouble. That is a fact. You might want to disagree with that, but that isnot because it is not true it is just that you probably believe Apple can DO IT. But you would have to agree that if they don't their commodity product will not continue to drive growth. All that said, most analysts are BETTING with you that Apple will innovate. They betting on the come, betting on Apple. That does not make them manipulators, just more like speculators.
Then naturally analysts for large investment banks are reluctant to downgrade or rate a stock as a sell if the stock is represented by the bank. Even if that is not policy for the bank, it is pretty hard to resist taking the easy route and at least never rate the stock lower than a "hold".
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[BRIEFING.COM] The stock market began the new trading week on the defensive note with small-cap stocks pacing the retreat. The Russell 2000 (-1.4%) and Nasdaq Composite (-1.1%) displayed relative weakness, while the S&P 500 lost 0.8% with all ten sectors ending in the red.
Global equities began showing some cracks overnight after China's Finance Minister Lou Jiwei poured cold water on hopes for new stimulus measures. Specifically, Mr. Lou said the government has no plans to change ... More
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