Consider Buying These Energy Players Despite Headwinds: Suncor Energy Inc. (USA) (SU) and More

At the same time, Suncor has been working towards reducing the cost of production and expand profit margins in the process. Management is pushing for an 8% annual growth rate until 2020. When you factor in dividend yields, this provides for a nice steady stream of appreciation and income support. The stock’s defensiveness is supported by rich reserves: The current deposits in the oil sand of Canada are estimated to have some trillion barrels of oil. With these kind of reserves, the company expects to continually produce oil for more than a hundred years. The readily available reserves enable the company to save money that could be used for exploration and instead invest in research and development in an effort to come up with more economic ways to extract oil and create value in the process.

Conclusion

Despite the bull run, Halliburton trades reasonably at a respective 14.7x and 10.3x past and forward earnings. Suncor is also reasonable at 9.7x forward earnings. I encourage backing these companies with a more stable producer, Schlumberger Limited. (NYSE:SLB) . It may trade at a premium 19.2x past earnings, but it is forecasted for 17.2% annual EPS growth over the next five years and is highly favored on the Street. The consensus rating is 1.7 out of 5 where 1 is a buy. This is one of the top ratings, and it is reinforced by a recent price target by HSBC Securities that is 25% above the prevailing price.

The article Consider Buying These Energy Players Despite Headwinds originally appeared on Fool.com and is written by David Gould.

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