As oil prices continue to sink under $30 per barrel, taking stocks down along with them, there seems to be few places to hide if you're an oil and gas investor betting on a rebound.
Exxon Mobil (XOM - Get Report) may be a good place to start. In Friday trading, its shares were down only 2.8% for the year, vs. a 7.6% decline for oil services bellwether Schlumberger (SLB - Get Report) , a 4.1% slide for well-capitalized and liquid refiner and marketer Valero Energy (VLO - Get Report) and a 16% drop for midstream large-cap Kinder Morgan (KMI - Get Report) as of Wednesday, which recovered to a 3.4% year-to-date gain Friday.
According to a report by Tudor Pickering Holt Securities, "[There's] no firm footing to be found in the energy complex yet in 2016, with XOM perhaps the only notable exception."
Indeed, the oil and gas giant is expected to trade the best through the fourth-quarter reporting season in the U.S., Jefferies analyst Jason Gammel said on Jan. 12. And Simmons International analyst Guy Baber thinks the company will continue to outperform in an environment in which oil prices continue to "languish and/or deteriorate," although he thinks the stock looks richly valued on any metric.
What's the magic behind Exxon Mobil?
Besides financial strength based on historically higher returns on capital than its peers, Exxon Mobil is well diversified. It makes money both from oil and gas production in the U.S. and abroad as well as from refining, the darling of the industry right now given lower feedstock costs. The company also has an enviable dividend that it raises each year, and has vowed not to cut.
Charges that it lied to its investors about climate change risks and didn't properly maintain its refinery in Torrance, Calif., that exploded haven't seemed to tarnish it.
Wells Fargo Securities ranks Exxon Mobil, along with ConocoPhillips (COP - Get Report) , Marathon Oil (MRO - Get Report) , led by a former ExxonMobil executive; and Occidental Petroleum (OXY - Get Report) , as outperform, expecting their stocks to go up anywhere from 25% to 38% over the next few years.
Occidental Petroleum is a holding in the Action Alerts PLUS Charitable Trust Portfolio, which is managed by TheStreet's Jim Cramer. The portfolio trimmed its holdings in Occidental somewhat on Friday, "taking advantage of the spike" in price since Wednesday. "We are not convinced the rally in oil is a sustainable representation of its long-term trajectory," Cramer wrote, adding that he was selling on strength.
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Of ConocoPhillips, Marathon and Occidental, Marathon's stock carries the most discounted valuation from both a debt-adjusted cash flow and enterprise value-to-Ebitdax standpoint, but Wells Fargo also expects it to be the most volatile. ExxonMobil and Occidental are more expensive, carrying "premium multiples." ConocoPhillips is more of an enigma, trading at a discount from a debt-adjusted cash flow basis but at a premium on an enterprise value-to-Ebitdax standpoint.
Among the major oil companies, Simmons' Baber is overweight on Suncor Energy (SU - Get Report) , Royal Dutch Shell (RDS.A - Get Report) (which is merging with BG) and Hess (HES - Get Report) , which he thinks provide the greatest combination of "financial resilience, operational leverage to any oil price recovery and reasonable valuation." However, he notes Hess is most in need of oil prices improving and is concerned that its spending will overshoot its cash flow.
Besides Schlumberger and Valero, observers think other stalwarts include integrated oil company Chevron (CVX - Get Report) , although there have been concerns that it might cut its dividend, and oil and gas explorers and producers EOG Resources (EOG - Get Report) , Cimarex Energy (XEC - Get Report) , Pioneer Natural Resources (PXD - Get Report) and Diamondback Energy (FANG - Get Report) , which all have sizeable, efficiently run operations.
Others like oilfield services giant Baker Hughes (BHI) , which is in the midst of being acquired by Halliburton (HAL - Get Report) , and natural gas transportation and storage provider Spectra Energy Partners (SEP) , which actually declared an increase to its dividend earlier this month, leading Raymond James to upgrade the company to a strong buy.
These stocks might be worth buying, or at least holding onto until oil prices pick up again.