North America Could Be Net Oil Exporter By 2025, 3 Stocks To Watch

Oil production in the U.S. is facing rapid growth.  Average daily crude output has reached 6.5 million barrels a day, up 779,000 barrels from 2011. This number is expected to increase by 900,000 barrels in 2013. Technologic advancements such as horizontal drilling and hydraulic fracturing are giving oil companies access to deposits previously thought unreachable.

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The boom isn’t just being experienced in the well-known oil regions of the U.S., North Dakota’s Bakken shale region has increased its daily barrel production from 125,000 to 750,000.  New jobs and wealth are being created as a result, which is a rare dose of good news.

Exxon Mobil predicts North America will be a net exporter of energy in 2025, a combination of increased production and slipping U.S. oil demand, which was at a 16-year low in 2012. This is also a transition period for refiners as they add new equipment to handle the domestic oil coming in, which is easier to refine than the imported crude they have been dealing with.

Business Solutions: Investing Ideas

We decided to screen the oil and gas refining and marketing industry for strong performers who may be able to further capitalize on increased U.S. production. We looked for companies with strong returns on equity, assets, and investments that are creating value for themselves and shareholders. The screen produced the three companies below (their metrics are first and their peers’ metrics are second):

The  list average 1-year return  for the 3 stocks mentioned below is 44%. Click the chart to access more Kapitall tools, login to create a practice portfolio to test your investing ideas and share portfolios with friends. 

1. CVR Energy, Inc. ( CVI): Together with its subsidiaries, refines and markets transportation fuels in the United States. Market cap at $4.34B, most recent closing price at $49.99.ROA: 14.48% vs. 6.09%   ROE: 31.48% vs. 15.59%   ROI: 18.44% vs. 8.50%  


2. HollyFrontier Corporation ( HFC): Operates as an independent petroleum refiner and marketer in the United States. Market cap at $8.99B, most recent closing price at $44.26.ROA: 15.75% vs. 11.16%   ROE: 28.82% vs. 20.60%   ROI: 21.86% vs. 14.18%  


3. Renewable Energy Group, Inc. ( REGI): Engaged in each aspect of biodiesel production, from acquiring feedstock, managing construction and operating biodiesel production facilities to marketing, selling and distributing biodiesel and its co-products. Market cap at $195.94M, most recent closing price at $6.42.ROA: 21.87% vs. 1.41%   ROE: 63.83% vs. 5.80%   ROI: 25.39% vs. 2.06%  


( List compiled by Kapitall's Nick Sousa)