Seminole Capital Management’s Energy Stock Picks Include Halliburton

Seminole also added shares of a third oil and gas major, ConocoPhillips (NYSE:COP). While ConocoPhillips has a P/E of 9, whether we compare its valuation to its trailing earnings or to forward estimates, it has been struggling more than the peers we’ve previously discussed. Net income has been down at the company, even after accounting for the recent spinout of Phillips 66 (NYSE:PSX). Warren Buffett has been a major investor in the company, with his Berkshire Hathaway reporting a position of 24 million shares in its most recent 13F (check out Buffett’s stock picks).

Nabors Industries Ltd. (NYSE:NBR), a contract driller which generally drills onshore, was another energy stock in the fund’s portfolio. Billionaire Steve Cohen’s SAC Capital Advisors was buying shares between July and September of 2012 (research more stocks Cohen and his team liked). Nabors is down 15% in the last year as investors worry about drilling activity. The current-year P/E multiple is 13, though that depends on analyst expectations of higher earnings this year than last year. Since drilling activity depends on energy prices and therefore on macro conditions, the stock carries a beta of 2.5.

Messner and his team also liked Halliburton Company (NYSE:HAL), which had been one of the most popular energy stocks among hedge funds in the third quarter of 2012 (see more energy stocks hedge funds love). Seminole owned almost 760,000 shares of the oilfield equipment and services company. Halliburton’s earnings have been down, but we like its prospects long term and so do Wall Street analysts given the forward P/E of 10 and five-year PEG ratio of 0.9. For purposes of comparison, larger peer Schlumberger Limited. (NYSE:SLB) has been performing slightly better recently and trades at 13 times expected forward earnings.

Disclosure: I own no shares of any stocks mentioned in this article.