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TheStreet Open House

14 Energy Stocks Illustrate Difficult Stock Picking

Today's table of oils-energy stocks shows the 14 companies selected have a mixed bag of valuations, 12 month performances with some near multi-year highs and some near multi-year lows.

The column labeled 'OV/UN Valued' shows that Transocean (RIG) is the most undervalued by 7.3%. Valero Energy (VLO)is the most overvalued by 72.7%.

The 'VE Rating' column shows that 13 stocks have '3-Engine' hold ratings and that one has a '2-Engine' sell rating.

The next column 'Last 12-month Return%' shows that the biggest losers over the last 12 months are: Peabody Energy down 33% and Diamond Offshore (DO)down 21.4%. The biggest winners are Chesapeake Energy (CHK) up 53.1%, Valero up 49.6% and Hess (HES) up 47.4% over the last 12 months.

The 'Forecast 1-Year Return%' column shows that all 14 stocks are projected to decline by 0.5% to 9.7% over the next 12 months.

The column that is headed 'P/E Ratios' represents the trailing 12 month price-to-earnings ratios and the stocks that have P/Es they are between 10.6 for Apache (APA) and 64.1 for Peabody Energy.

The '200-day SMA' column represents the 200-day simple moving averages. Peabody, Diamond Offshore, Kinder Morgan (KMP) and Transocean are below their 200-day SMAs. The others are above which reflects the risk of a reversion to the mean.

How to use Value Levels: If you are looking to buy stocks or add to long positions, my buy-and-trade methodology recommends that you employ good-until-cancelled GTC limit orders to buy weakness to a value level shown in the table. The value levels followed by an 'M' apply for January only. Those followed by a 'Q' apply until the end of March. Those followed by an 'S' apply until the end of June. Those followed by an 'A' apply for all of 2014.

How to use Pivots: A pivot will likely be a magnet during the time frame shown by the letter. Pivots followed by an 'M' apply for January only. Those followed by a 'Q' apply until the end of March. Those followed by an 'S' apply until the end of June. Those followed by an 'A' apply for all of 2014. If a value level or risky level is violated during its time horizon that level becomes a pivot and has an 85% chance of being re-tested during its time horizon.

How to use Risky Level: If you are looking to book profits on stocks, my buy-and-trade methodology recommends that you employ GTC limit orders to sell strength to a risky level shown in the table. The risky levels followed by an 'M' apply for January only. Those followed by a 'Q' apply until the end of March. Those followed by an 'S' apply until the end of June. Those followed by an 'A' apply for all of 2014.

At the time of publication the author held no positions in any of the stocks mentioned.

Follow @Suttmeier

This article represents the opinion of a contributor and not necessarily that of TheStreet or its editorial staff.

Richard Suttmeier is the chief market strategist at ValuEngine.com. He has been a professional in the U.S. Capital Markets since 1972, transferring his engineering skills to the trading and investment world.

Suttmeier has an engineering degree from Georgia Tech and a Master of Science degree from Brooklyn Poly. He began his career in the financial services industry in 1972 trading U.S. Treasury securities in the primary dealer community. He became the first long bond trader for Bache in 1978, and formed the Government Bond Department at LF Rothschild in 1981, helping establish that firm as a primary dealer in 1986. This experience gives him the insights to be an expert on monetary policy, which he features in his newsletters, and market commentary.

Suttmeier's industry licenses include, Series 7 and Registered Principal (Series 24). He has been the Chief Market Strategist for ValuEngine.com since 2008 and often appears on financial TV.

Click here for details on Suttmeier's "Buy and Trade" investment strategy.

Richard Suttmeier can be reached at RSuttmeier@Gmail.com
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