5 Intriguing Energy Stocks to Invest In
Jun 12th 2013 8:11PM
Updated Jun 12th 2013 11:00PM
Whether it's the cash building up in your portfolio or just plain boredom, it seems like investors are always on the lookout for the next big thing. In the energy space, the big growth these days is coming from the oil and gas production out of shale plays and from deepwater sources. To help you find some stocks to invest in that are benefiting from this growth, I've selected five very intriguing energy stocks worth a closer look.
If you've been digging around for a solid income stock to invest in, then you might want to dig into frac sand producer Hi-Crush. The company currently pays about an 8% distribution, which it has a clear path to grow in the future. With a low-cost structure, large runway of growth opportunities thanks to the booming shale industry and long-term contract securing its revenue, Hi-Crush has the potential to produce market crushing future returns.
BreitBurn Energy Partners
Sticking with the income theme, BreitBurn is also a high-yielding stock, offering investors a more than 10% current yield. Like Hi-Crush, Breitburn has a visible path to grow its distribution as $500 million in oil and gas asset acquisitions that meet its criteria will yield a $0.21 per unit accretion to its distributable cash flow. With exploration and production companies desperate for capital these days, it opens up a number of opportunities for BreitBurn to continue to acquire mature production assets and grow that large distribution. As you can see from the slide below, the math is quite compelling, which makes BreitBurn such an intriguing stock:
Oil and gas companies are investing vast sums to explore for oil in increasingly harder-to-reach places. This has them turning to reservoir optimization specialist Core Labs to help find the best way to develop these plays. That's yielding significant profits for Core, which last quarter reported its most profitable quarter ever. With its strength in deepwater hydrocarbon development, this is a great stock to invest in to benefit from the capital being poured into drilling for oil under the sea.
C&J Energy Services
Joining Core Labs in helping oil companies with developing more complex oil and gas projects is C&J Energy Services. The company specializes in complex, technically demanding well completions, meaning it's an important service provider to the industry. Its shares are currently dirt cheap at less than seven times earnings, which is makes this a really intriguing stock to consider investing in if you are a value investor.
Nuverra Environmental Solutions
Probably the most intriguing company, at least in terms of its core business, is Nuverra. The company is in the process of building out a full-cycle environmental solution for shale producers, which includes managing the water used in fracking while recently expanding to provide solutions for solid waste like drill cuttings in the Bakken. Like C&J, its stock is cheap and its future opportunities are immense, which makes it a very intriguing energy stock especially when considering the importance that environmental solutions will play as we keep fracking.
Final Foolish thoughts
While I've personally invested in both Nuverra and Hi-Crush, given the recent run-up in units of Hi-Crush, I'd prefer to add to my position in Nuverra if having to choose between the two. I like how the company is tackling the environmental issues of fracking and seems to be making very smart acquisition choices to complement its suite of services. My only concern is that a competitor like Halliburton will bring innovations to the market that could put the company's competitive advantage at risk.
That's why investors who are considering Nuverra need to watch Halliburton closely. Not only that but Halliburton is one of the top oil-field services companies in the business and one of those most in tune with the domestic market. To learn more about the company, you can access The Motley Fool's new premium research report. Simply click here now and learn everything you need to know about how Halliburton is positioning itself both at home and abroad.
The article 5 Intriguing Energy Stocks to Invest In originally appeared on Fool.com.Fool contributor Matt DiLallo owns shares of Nuverra Environmental Solutions and has the following options: short July 2013 $17.5 puts on Hi-Crush Partners. The Motley Fool recommends BreitBurn Energy Partners and owns shares of Hi-Crush Partners and Nuverra Environmental Solutions and has the following options: long Jan. 2014 $4 calls and short Jan. 2014 $3 puts on Nuverra Environmental Solutions. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.
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