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Portfolio management is simultaneously an interesting and time consuming exercise. Depending on your risk and preference profile, you can choose various tools to help you in decision making.
I generally rely upon fundamental analysis of the companies for picking up the right stocks. However, I use additional metrics as well such as ratios to validate my picks. One of such metrics is Price to Book ratio. Price to Book ratio denotes the division of the stock’s latest closing price by its latest quarter’s book value per share. This simple ratio gives you an idea about the firm’s assets per share. However, this ratio ideally should not be used to make comparison between the stocks belonging to different industries. As with other ratios, this ratio should also not be used on its own for making portfolio decisions. All other things being equal, lower Price to Book ratio is considered to be favorable. Following is the list of my top energy stocks with low Price to Book ratio:
Patroleo Brasileiro Petrobras SA (NYSE:PBR): This 151.84 billion company has its stock trading at the Price to Book ratio of 0.85. The stock is currently trading at $23.27, up 1.48 percent from its previous close. Patroleo Brasileiro Petrobras is engaged in the business of exploring and producing natural gas and oil. It also trades and transports the resulting products. The stock has Price to Earnings ratio of 16 and its latest Earnings per Share was reported at $1.46. The company reported that it is looking to institute a legal action for the removal of injunction against Transocean. Brazil served the injunction notice to Transocean last week. This ban is likely to have negative impact on Patroleo Brasileiro Petrobras as it leases eight rigs from Transocean. Patroleo Brasileiro Petrobras stock has traded in the range of $17.27 and $32.60 in the past 52 weeks. The stock has been rated Buy by Jefferies Group, whereas Morgan Stanley has given it Overweight rating. It has been given the price target of $29 by Morgan Stanley.
Chesapeake Energy Corporation (NYSE:CHK): The stock gained 3.71 percent in the current trading session and is at $19.57. Chesapeake Energy commands $12.59 billion in market capital and it has its Price to Book ratio pegged at 0.92. The company is one of the largest producers of natural gas in the US and it showed 25 percent year over year production growth for its fiscal second quarter of the year. The company also increased its production outlook for the entire year by 8 percent. The company stock has traded in the range of $13.32 and $29.87 in the past 52 weeks. Chesapeake Energy is mainly dependent on Natural Gas as it accounted for 79 percent of the company’s production. So, the company’s fortune is directly linked to natural gas prices. It is especially susceptible to potential decline in natural gas prices due to deliveries from Marcellus Shale. Another major factor for the company is its leverage position as it displays ‘higher than industry average’ debt to capital ratio of 42 percent. The stock has been given ‘Sector Perform’ rating by RBC Capital and its price target has been set at $23, while Stifel Nicolaus downgraded its rating from Buy to Hold.
Hess Corporation (NYSE:HES): The company stock has been given Neutral rating by JPMorgan Chase. The stock has been given price target of $70, thus offering a decent upside from its current price of $54.17. The company stock has Price to Book ratio of 0.99. Hess Corporation commands market capitalization of $18.34 billion and it reported its latest Earnings per Share at $3.70. The stock is trading considerably lower than its 52 weeks high price of $67.86. Its lowest price point for the corresponding period is $39.67. Hess Corporation is an integrated energy company and is active internationally in various countries including the United States, the United Kingdom and Malaysia. The company stock is trading at the Price Earnings ratio of 14.62, largely in line with its peers.
China Petroleum & Chemical Corp. (NYSE:SNP): The stock has Price to Book ratio of 1.07 and it has market capitalization of $80.97 billion. The company reported its latest Earnings per Share at $9.90. China Petroleum & Chemical has been rated Buy by Jefferies Group. The stock is currently trading at $93.10, up 0.74 percent. China Petroleum & Chemical has traded in the range of $82.51 and $125.36 in the past 52 weeks. The stock is trading at the Price Earnings ratio of 9.42, making this stock especially attractively priced.
