Bolstered by high prices and soaring demand, oil and gas majors are expected to break their annual earnings records. On Tuesday, Exxon Mobil Corp. (XOM, Financial) did just that when it posted a $56 billion profit for 2022. According to Reuters, this not only set a company record, but was a historic high for the Western oil industry.
The Irving, Texas-based company’s previous record, from 2008, was a $45.2 billion net profit, when oil hit $142 per barrel. Despite earnings taking a $1.3 billion hit from a European Union windfall tax and asset impairments, last year’s earnings also got a boost from cost cuts that were implemented during the pandemic.
While Exxon Mobil’s stock initially fell following the announcement, it recovered slightly into positive territory. Further, after posting a record performance in 2022 with about a 58% return, the energy sector has continued to perform well this year with a gain of 4% so far.
As such, even though volatility persists due to inflation, rising interest rates and other geopolitical conflicts, gurus are still finding value opportunities among energy companies.
According to GuruFocus’ Hot Picks, a Premium feature based on 13F filings, the oil and gas stocks most-bought by gurus during the third quarter included Chevron Corp. (CVX, Financial), Valvoline Inc. (VVV, Financial), ConocoPhillips (COP, Financial), Occidental Petroleum Corp. (OXY, Financial) and Halliburton Co. (HAL, Financial).
Investors should be aware 13F filings do not give a complete picture of a firm’s holdings as the reports only include its positions in U.S. stocks and American depository receipts, but they can still provide valuable information. Further, the reports only reflect trades and holdings as of the most-recent portfolio filing date, which may or may not be held by the reporting firm today or even when this article was published.
Chevron
Held by 23 gurus with a combined equity portfolio weight of 24.22%, 11 buys and nine sells were recorded for Chevron (CVX, Financial) in the third quarter.
The San Ramon, California-based oil and gas producer has a $334.52 billion market cap; its shares were trading around $173.18 on Tuesday with a price-earnings ratio of 11.57, a price-book ratio of 2.10 and a price-sales ratio of 1.42.
The GF Value Line suggests the stock is modestly undervalued based on its historical ratios, past financial performance and analysts’ future earnings projections.
Further, the GF Score of 78 out of 100 indicates the company is likely to have average performance going forward. While its financial strength rating was high, the profitability, growth, GF Value and momentum ranks were more moderate.
Of the gurus invested in Chevron, Warren Buffett (Trades, Portfolio) has the largest stake with 8.55% of its outstanding shares. Ken Fisher (Trades, Portfolio), Jim Simons (Trades, Portfolio)’ Renaissance Technologies, Stanley Druckenmiller (Trades, Portfolio), the Smead Value Fund (Trades, Portfolio), Charles Brandes (Trades, Portfolio), Jeremy Grantham (Trades, Portfolio) and several other gurus also have positions in the stock.
Valvoline
Recording 10 buys and two sells for the third quarter, 12 gurus are invested in Valvoline (VVV, Financial). The combined weight in their equity portfolios is 10.37%.
The manufacturer of automotive oil, additives and lubricants, which is headquartered in Lexington, Kentucky, has a market cap of $6.31 billion; its shares were trading around $36.19 on Tuesday with a price-earnings ratio of 15.33, a price-book ratio of 20.80 and a price-sales ratio of 5.36.
According to the GF Value Line, the stock is modestly overvalued currently.
The GF Score of 69 means the company has poor future performance potential on the back of high ranks for profitability and momentum despite receiving low marks for growth, financial strength and GF Value.
With a 3.30% stake, Andreas Halvorsen (Trades, Portfolio) is Valvoline’s largest guru shareholder. Other top guru investors include Glenn Greenberg (Trades, Portfolio), Larry Robbins (Trades, Portfolio), Simons’ firm and Steven Cohen (Trades, Portfolio).
ConocoPhillips
ConocoPhillips (COP, Financial), which recorded an equal number of buys and sells for the quarter at 10, is held by 22 gurus with a combined equity portfolio weight of 28.43%.
The Houston-based oil and gas producer has a $151.62 billion market cap; its shares were trading around $121.68 on Tuesday with a price-earnings ratio of 8.77, a price-book ratio of 3.09 and a price-sales ratio of 2.10.
Based on the GF Value Line, the stock appears to be fairly valued currently.
The GF Score of 83 indicates the company has good outperformance potential, driven by high ratings for three of the criteria and middling marks for GF Value and momentum.
Dodge & Cox has the largest stake in the company with 1.65% of its outstanding shares. ConocoPhillips is also being held by Fisher, Diamond Hill Capital (Trades, Portfolio), Bill Nygren (Trades, Portfolio), Smead Capital Management, Yacktman Asset Management (Trades, Portfolio), Elfun Trusts (Trades, Portfolio) and a number of other gurus.
Occidental Petroleum
With nine buys and eight sells for the quarter, Occidental Petroleum (OXY, Financial) is held by 12 gurus. They have a combined equity portfolio weight of 27.03% in the stock.
The oil and gas producer headquartered in Houston has a market cap of $58.03 billion; its shares were trading around $63.85 on Tuesdaywith a price-earnings ratio of 5.18, a price-book ratio of 3.06 and a price-sales ratio of 1.74.
The GF Value Line suggests the stock is modestly overvalued currently.
Further, the GF Score of 68 indicates the company is likely to have poor performance going forward. Despite having a high rating for profitability, its growth, momentum and financial strength ranks were moderate and its GF Value was low.
Of the gurus invested in Occidental, Buffett has the largest stake with 21.38% of its outstanding shares. Dodge & Cox, the Smead Value Fund (Trades, Portfolio) and Cohen also have notable holdings.
Halliburton
Halliburton (HAL, Financial), which is held by 14 gurus, recorded nine buys and six sells for the three-month period. Their combined equity portfolio weight is 9.63%.
The Houston-based oilfield services company has a $37.37 billion market cap; its shares were trading around $41.15 on Thursday with a price-earnings ratio of 23.79, a price-book ratio of 4.70 and a price-sales ratio of 1.85.
According to the GF Value Line, the stock appears to be significantly overvalued currently.
The company also has poor performance potential based on its GF Score of 60. It received a high momentum rating, but its profitability and financial strength ranks were more moderate and the growth and GF Value marks were weak.
With a 1.72% stake, Richard Pzena (Trades, Portfolio) is Halliburton’s largest guru shareholder. Barrow, Hanley, Mewhinney & Strauss, Hotchkis & Wiley, Fisher, Brandes, Cohen and Mario Gabelli (Trades, Portfolio) also have significant positions in the stock.
Other popular picks
Additional stocks that were popular with gurus during the third quarter included SLB (SLB, Financial), Enterprise Products Partners LP (EPD, Financial), Consol Energy Inc. (CEIX, Financial), Exxon Mobil and Devon Energy Corp. (DVN, Financial).
