Top Three 2009 Oil Stocks

Top Three 2009 Oil Stocks

Back in December, RealMoney.com contributor, Dan Dicker, recommended three oil stocks for 2009, the good, the bad, and the speculative. Click on the video below to see if Dan still likes these stocks and how to buy them.

First is the 'good' play, Chevron(CVX). Dicker said this is one of the best consolidated oil companies out there that has solid refinery exposure. The company also has a strong balance sheet with a good dividend yield.

Winner or Loser?

Many analysts who believe oil will go higher and trade in a $35 to $50 range are bullish on large cap integrated names like Chevron. The company reported a fourth quarter revenue drop of 28% due to falling oil prices. However, its production guidance for 2009 is 7% -- well ahead of its peers. The company also has $9.6 billion in cash on its balance sheet more than enough to cover its dividend.

Next is the 'bad' play, Enbridge Energy Partners(EEP). It's an oil transportation company with a solid crude oil business but a taxing natural-gas gathering and processing operation. However, on the plus side, the company yields a 14% dividend. Stock has been beaten down, Dicker said, unreasonably so, due to its exposure to hedge funds.

Winner or Loser?

Enbridge Energy Partners reported a 26% increase in adjusted net income for 2008. But, EEP expects a tough 2009 due to the global economy and falling natural gas processing margins causing the company to lower guidance. It has $1.8 billion in liquidity to help fund projects through most of 2009 and is currently on the look-out for ways to raise money for the remainder of this year and 2010. Analysts say this stock is currently undervalued and should be worth $57 but is currently trading in the mid $20s

Last up is the 'speculative,' Petro-Canada(PCZ). Dicker says this has been a BAD stock to own. It was really beaten up in 2008 due to its large exposure to exploration in oil sands. But Dicker predicts that if oil can jump into the $50 to $60 range, the stock could pop.

Winner or Loser?

Petro-Canada reported fourth quarter operating earnings of $518 million combined with a loss of $691 million. It recently declared a quarterly dividend of 20 cents a share. The company has already reduced capital spending for the first quarter in 2009 and OPEC cuts led it to trim its 2009 production guidance. Petro-Canada also had a 2008 cash balance of $1.4 billion and nearly $5 billion of unused credit. Stock recently got a downgrade at Raymond James from outperform to market perform.

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