Oil Stocks: A Real-Time Case Study in Value Investing

I just took a snapshot of the front page of Yahoo Finance, CNBC.com, and Bloomberg.com:

Bloomberg.com @ 1725 ESTcnbcCNBC.com @ 1725 ESTYahoo Finance - Business Finance, Stock Market, Quotes, News_2014-12-11_17-20-41Finance.Yahoo.com @ 1725 EST

WHO WOULD EVER BUY AN OIL STOCK???

Apparently, nobody.

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Energy companies as a whole have been blowing up left and right and now sell at a decent discount to the market.

OIL

Oil specific names are getting killed and they are also getting cheap (at least on an enterprise multiple basis).

Of course, cheap things can get a lot cheaper. Nonetheless, the long-term track record of buying cheap stuff is pretty clear (or here).

Here are the Top 10 cheapest energy names that are at least $2B in market cap (many have a large exposure to oil):

Ticker Name EBIT/TEV Yield Percentile Cheapness Rank
PBF US Equity PBF ENERGY INC-CLASS A 22.26% 99.90%
VLO US Equity VALERO ENERGY CORP 20.98% 99.80%
RIG US Equity TRANSOCEAN LTD 18.16% 99.70%
SM US Equity SM ENERGY CO 17.22% 99.50%
OIS US Equity OIL STATES INTERNATIONAL INC 16.72% 99.40%
HP US Equity HELMERICH & PAYNE 16.29% 99.20%
IOC US Equity INTEROIL CORP 15.61% 98.70%
WNR US Equity WESTERN REFINING INC 14.85% 98.10%
OXY US Equity OCCIDENTAL PETROLEUM CORP 14.17% 97.70%
NOV US Equity NATIONAL OILWELL VARCO INC 14.13% 97.70%

If you’re a value investor, this should be exciting–not scary…

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