Six High Quality Energy Investments

Through the second quarter, six global energy companies with combined Enterprise Value of $1.3 trillion are producing more oil and gas, participating in recovering oil price and positioned for improving margins downstream. Their stocks are attractively priced at McDep Ratios ranging from 0.57 to 0.81. A McDep Ratio of 1.0 corresponds to an unlevered return of 7% a year after inflation. The estimated return presumes a long-term real price of $75 a barrel for oil that trades currently at an average $82 a barrel for the next six years in the futures market. Financial risk is low with debt ranging from 0.09 (“AAA” quality) to 0.25 (“A” quality) times present value.

Investors appear increasingly attracted to the stocks as five of the six are priced above their 200-day average, implying an upward trend by that measure. All buy-recommended, the six are, in order of increasing McDep Ratio, ConocoPhillips (COP), Total S.A (TOT), Royal Dutch Shell (RDS), Chevron (CVX), BP plc (BP) and ExxonMobil (XOM).