Insiders are Buying These Stocks, Should You?
Given the volatility, the chances of accurately predicting oil prices are next to zero. So, I find Goldman Sachs’ oil price target of $20 per barrel unrealistic. In 2008, Goldman Sachs argued that oil prices would reach $200 per barrel, but that never happened.
Noble Corporation (NE)
Noble Corp operates as an offshore drilling contractor for the oil and gas industry worldwide. It owns and operates a fleet of mobile offshore drilling units. Shares of the company have plunged almost 50% in the last 52-weeks and insiders are using this opportunity to load on the stocks at dirt cheap valuation.
Earlier this month, Noble Corp disclosed insiders have bought the stock. This is a big vote of confidence for a company that has rarely had any insider buying over the last few years. With institutional ownership at over 90% and increased insider buying, the stock definitely warrants a buy rating. What makes the investment even more lucrative is the fact that Noble Corp has a generous dividend yield of 11.51%. So, investors can enjoy the high yield while waiting for a recovery in oil prices, making this stock a buy.
Occidental Petroleum (OXY)
Occidental Petroleum Corporation engages in the acquisition, exploration, and development of oil and gas properties in the United States and internationally. The company operates in three segments: Oil and Gas; Chemical; and Midstream, Marketing and Other.
Occidental witnessed one of the biggest insider purchases as the company’s director bought 695,000 worth of shares at about $69.50. The stock may have appreciated a little since then, but the company still possesses large upside potential.
Occidental has one of the richest assets in the Permian Basin, which is considered to be one of the most productive energy plays in the U.S. As a result, the company has managed to grow production and has added reserves. The company has also been cutting cost effectively and looks nicely positioned to ride a crude recovery. The stock also has a decent dividend yield of 4.08% making it a good buy.
No list of oil stocks is complete without the mention of ExxonMobil. As compared to others, the oil giant has only plunged about 20% in the last 52 weeks. Given Exxon’s history of surviving crashes and 30+ years of hiking dividends, buying it at present prices is a no-brainer.
The company witnessed increased insider buying, and this is a big vote of confidence as insiders have not bought Exxon since early 2013. Jeffrey Woodbury, the vice president for investor relations at Exxon recently bought $400,000 worth of shares at an average price of $78.07, which is close to the current levels.
Over the last few years, Exxon has witnessed an impressive rise in share price whenever insiders have stepped in to buy the stock. The company has enough cash to survive the oil crash and sustain its dividend yield of 3.8%. Thus, Exxon is a certain buy at this point in time.
With cheaper crude increasing demand, oil prices are bound to rise in the near future. The increased insider activity is a vote of confidence and investors can consider buying the stocks mentioned above to benefit from the recovery in oil prices.
Published on Oct 17, 2015By Ayush Singh