Smart Money’s Five Favorite Energy Stocks

#3 Anadarko Petroleum Corporation (NYSE:APC)

– Number of Hedge Fund Holders (as of March 31): 59
– Total Value of Hedge Fund Holdings (as of March 31): $1.84 billion
– Hedge Fund Holdings as Percent of Float (as of March 31): 7.80%

Anadarko Petroleum Corporation (NYSE:APC) has much to like. The company is cutting expenses, improving productivity, selling non-core assets, and focusing on higher return wells. The company’s projects in Gulf of Mexico, Mozambique, and Ghana should generate substantial returns on capital and much-needed cash flow. The company also has a strong balance sheet and like Devon, might be an acquisition target for bigger companies. A total of 59 funds from our database held the stock at the end of March, down by two quarter-over-quarter.

#2 Exxon Mobil Corporation (NYSE:XOM)

– Number of Hedge Fund Holders (as of March 31): 60
– Total Value of Hedge Fund Holdings (as of March 31): $2.5 billion
– Hedge Fund Holdings as Percent of Float (as of March 31): 0.70%

Although Exxon Mobil Corporation (NYSE:XOM) isn’t cheap with a forward P/E of 20.6, the stock’s dividend is about as safe as it can get in the energy sector. Given the quarterly payout of $0.75 per share, that translates to a dividend yield of 3.33% at current prices, or more than 70% higher than the ten year treasury yield. Exxon Mobil has been paying dividends for 33 straight years and is one of the few energy companies that is free cash flow positive. Exxon Mobil has rallied 17% year-to-date and could rally further if Brent prices pass $60-$70 per barrel.

#1 Pioneer Natural Resources (NYSE:PXD)

– Number of Hedge Fund Holders (as of March 31): 61
– Total Value of Hedge Fund Holdings (as of March 31): $3.18 billion
– Hedge Fund Holdings as Percent of Float (as of March 31): 13.80%

Pioneer Natural Resources (NYSE:PXD) reported better-than-expected results for its first quarter, with a first quarter loss of $0.64 per share versus estimates of a loss of $0.75 per share. The company’s earnings were above analyst expectations because production was 3% higher than expected for the quarter. Due to the production strength, management raised its full year 2016 production growth outlook to above 12% rather than the previous above 10%. The company will still spend the same amount of CAPEX for the year of around $2 billion. Analysts have an average price target of $183.85 per share for Pioneer Natural Resources’ stock.

Disclosure: none