Energy Investors Clamor for Four More Years

Energy investors certainly like the sound of four more years.

Since President Bush took office in early 2001, oil prices -- and oil stocks -- have surged to record levels. Some hold Bush, who hails from Texas oil country, at least somewhat responsible. Others dismiss his influence. But even the latter group tends to believe that Bush would do nothing to harm big energy companies during a second term in office.

Democratic challenger Sen. John Kerry, on the other hand, might push for major changes.

"Either one will have to deal with $55 oil," says Oppenheimer analyst Fadel Gheit. "But I believe we will see very slow, if any, change under Bush."

Gheit puts more weight on the election results than some other industry experts. He suspects that a Bush victory could, in fact, bring higher energy prices than a Kerry win. Still, he expects energy companies to remain extremely profitable regardless of who winds up in office.

To be sure, the sector has enjoyed an amazing run so far. And it continues to gather more steam as the election draws near.

"For the first time ever, all 32 stocks we cover have outperformed the S&P 500 year to date," Gheit wrote this week. "Barring a significant collapse in oil and gas prices, we expect earnings ... to exceed consensus estimates, which should support even higher stock prices and extend their winning streak."

Record Breaker

Meanwhile, companies like Devon (DVN Quote) keep shattering their own records.

After a big 2003 merger with Ocean Energy, Devon now ranks as the largest independent oil and gas producer in the nation. It boasts a diversified portfolio with assets 40% weighted in oil and 60% weighted in natural gas.

Last year the company saw both revenue and profits skyrocket. Total sales jumped 70% to $7.35 billion, while earnings soared by more than 1,500% to $1.75 billion. Devon attributed its explosive growth to rising fuel prices -- with oil up 18% and natural gas up 61% -- in addition to the merger.

It "was a record-breaking year for Devon," the company reported in its 2003 10-K. "Devon delivered the highest [earnings] ... in its 15 years as a public company."

But Devon could do even better. The company has continued to grow both revenue and profits this year -- even before oil hit $50 a barrel.

Devon itself never offers formal earnings projections. However, the company often pleases Wall Street by beating expectations. And one analyst recently upped the stock to strong buy in anticipation of good news.