As inflation fears persist, commodity and oil stocks have been favorites among fund managers looking to protect investors and diversify portfolios.
In this inflationary environment, having some energy exposure helps reduce some risks in a portfolio. However, given the volatility in the energy sector, it is important to size positions conservatively. In today's IBD Screen of the Day, we look at some of the top energy stocks in the list of Stocks Funds Are Buying.
Oil Stocks: Valaris Hits Buy Point Again In Morning Trading
Shares of Valaris hit a 61.80 buy point of an ascending base again in today's trading as the stock tries to break out of an ascending base. Since the move, shares have retreated as they consolidate near the breakout point.
Ranking fifth in IBD's oil and gas drilling group, Valaris has been a top-performing stock as the group remains red-hot; it is second out of IBD's 197 industries. After posting five straight years of losses, Valaris is expected to finally turn a profit this year, with analysts projecting EPS of 93 cents, which is then expected to jump dramatically to $4.02 in 2023.
Vermilion Energy Nears Buy Point on Strength
Canada-based Vermilion Energy is trading extremely close to a 24.03 buy point as it forms an erratic cup base. Shares are also trading with a relative strength line at new highs as oil prices continue to rise.
Last month, Vermilion reported first-quarter fund flows from operations that rose 21% over a quarter prior. Strong results allowed the company to improve its balance sheet, paying off $280 million to reduce its debt to $1.4 billion. The company also reinstated a quarterly cash dividend of 6 Canadian cents a share that had been suspended during the pandemic.
Weatherford Reduces Losses, Aims For Profitability In 2023
Funds also have been buying shares of American-Irish Weatherford International, which provides equipment technology and services to oil and gas drilling companies.
Weatherford has struggled to make a profit over the past number of years, with losses accumulating in 2020 when the company posted a loss of $6.89 per share, according to MarketSmith. While losses have been diminishing — this year the company expects a loss of $1.37 per share — it doesn't expect to turn a profit until 2023.
Weatherford is forming a cup base with a 40.26 buy point and is trading near the 50-day moving average.
