The energy sector has been doing well this year, so why is giant BP lagging its peers? While rivals such as Shell and Williams Cos. shine, BP ranks a dismal No. 17 on IBD's list of oil and gas companies. The U.K.-based energy giant got a bit of good news Tuesday though, as its stock Relative Strength Rating improved from 68 last week to 79, according to MarketSmith.
BP Stock Strong, Fundamentals Weak
Research shows that the market's biggest winners often have an RS Rating above 80 as they launch their biggest climbs. Its 79 RS Rating puts BP just below that threshold. Among its other ratings, BP has a dismal 15 Earnings Per Share Rating, out of 99. Its Composite Rating, a composite of five other key fundamental and technical ratings, is 62, better than its EPS Rating, but still below the 80 or higher rating that CAN SLIM investors like to see.
There are bright spots though. BP can boast a B SMR Rating (sales + profit margins + return on equity), on an A-to-E scale, mostly reflecting stronger — in fact outstanding — results last year. Additionally, it has a surprisingly strong C+ Accumulation/Distribution Rating. The C+ rating indicates that slightly more big funds are buying its shares than selling.
See How IBD Helps You Make More Money In Stocks
BP stock fell to a 25.36 low on July 14, 2022, ahead of other companies that kept falling until around mid-October amid the bear market. From that July low, it climbed about 63% to a sweet 41.38 high on Feb. 14 this year. It's consolidated since then, trading in a fairly narrow range. The oil and gas major is trying to complete a consolidation with a 41.38 buy point. See if the stock can break out in heavy volume. It's closed higher in six of the last seven trading sessions, making it one to watch.
BP Fundamentals On Roller Coaster Ride
Last quarter BP reported a 66% plunge in EPS to 89 cents, on a 29% drop in revenue to $49.5 billion. The quarter before that it recorded a 14% dip in EPS, although it managed to post an 11% gain in sales. Contrast that to last year when it reported a 162% surge in EPS on a 53% jump in revenue for the September-ended quarter. It followed that up with a 29% EPS gain on a 53% surge in sales in December.
BP stock earns a near-worst No. 17 rank in the 20-stock Oil & Gas-Integrated industry group. Williams Cos is No. 3 and Shell is No. 2 among the group's highest-rated stocks. No. 1 is small-cap Antero Midstream, with about $1 billion annual sales.
When looking for the best stocks to buy and watch, one factor to watch closely is relative price strength.
The exclusive Relative Strength Rating from Investor's Business Daily identifies price performance with a 1 (worst) to 99 (best) score. The score shows how a stock's price movement over the trailing 52 weeks holds up against all the other stocks in our database.
Please follow James DeTar on X, formerly known as Twitter, @JimDeTar
