And Just Like That, Energy Stock Get Thrown to the Wayside

Did you see that Exxon Mobil Corp. (NYSE: XOM, Rated “D+”) got kicked out of the Dow Jones Industrial Average?

That’s important news considering it’s been a part of the benchmark for 92 years. That’s quite a feat seeing that the DJIA includes only 30 companies.

Exxon joined those ranks in 1928 back when it was the Standard Oil of New Jersey. The company as we know it today was formed in 1999 when the biggest merger in history (between Exxon and Mobil) created the world’s largest oil company.

Teaser: Exxon’s exile is larger than one company, though. Energy stocks as a whole are falling out of favor. But let’s take a look at what the Weiss Rating say >>

In 2013, Exxon Mobil was the most valuable company on the planet. And by mid-2014 its market value hit $446 billion as crude prices traded above $100 a barrel.

Now, energy stocks are waiting on the sidelines like the last kid picked for dodgeball. When trading opens next Monday, Chevron Corp. (NYSE: CVX, Rated “D+”) will be the only energy stock left.

Exxon’s spot will be taken by tech company Salesforce.com (NYSE: CRM, Rated “C-”). Pfizer (NYSE: PFE, Rated “C”) also got the boot in exchange for biotech company Amgen (Nasdaq: AMGN, Rated “B-”). And defense contractor Raytheon (NYSE: RTX, Rated “D+”) was replaced by manufacturer Honeywell International (NYSE: HON, Rated “C”).

Old stodgy companies are out, and technology is in. The real driver behind these changes was Apple Inc.’s (Nasdaq: AAPL, Rated “B”) most recent stock split. Since the Dow is weighted by price and not market cap, tech stocks will now represent a smaller piece of the portfolio.

As we’ve said in many different publications here at Weiss, technology is the future. That’s one of the reasons we recently launched the Weiss Technology Portfolio.

But just because tech is soaring doesn’t mean we should just throw away energy … or does it?

The Dow may think that energy stocks aren’t profitable anymore, but I won’t believe it until the Weiss Ratings confirm it.

So today, I took a look at all the stocks in the energy sector to see who the winners are … and the losers.

The top rated was TerraVest Industries Inc. (TSX: TVK, Rated “B”).

TerraVest is a market-leading manufacturer of home heating products, and transport and storage equipment for propane, anhydrous ammonia and natural gas liquids. Its expertise is in manufacturing steel and fiberglass products and it applies that to the niche market of energy.

This is a pick and shovel play at it’s finest. Homes need to be heated, oil and gas need to be moved and regional agricultural service providers need to supply NH3. TerraVest provides the equipment to store and transport all those materials.

Its customers are wholesalers, municipalities and pretty much any commercial or industrial company focused on the mining, power and transport of oil and gas or water. It also provides well servicing to the oil and gas sector.

So, there’s a lot of things that the company has its hands in.

TerraVest did see some impact of the coronavirus during its second-quarter earnings.

Investors seemed optimistic after the slide in March, but quickly lost steam. However, share prices are still up since the beginning of the year.

Our second-place energy stock was Euronav NV (NYSE: EURN, Rated “B-”).

Euronav is an independent tanker company engaged in the shipping and storage of crude oil.

The company continues to struggle with the restrictions on mobility and movement of its ships due to the coronavirus pandemic. Despite this, the revenue for the first half of 2020 was double that of the first half of 2019.    

But check out the chart below. Looks like investors aren’t impressed …

Shares drop but then recover as investors wait to see if the economy will pick up in the last quarter of 2020.

These were the only two stocks with a “Buy” rating in the whole sector. And neither was a pure energy play like Exxon Mobil.

It’s clear that energy stocks are in for a rough ride right now. But I’m sure that at the first sign of gasoline and oil consumption, we’ll see some names start to take off again.

So how about the losers of today’s stock screen?

Well that was a tough one. Out of the 1,331 stocks in that sector, 212 of them are rated “D-” or lower. I didn’t see any recognizable names worth bringing to your attention. But, if you’ve got a few energy stocks in your portfolio, you might want to check to see if you should cut them loose.

Just go to https://weissratings.com/stocks/screener, add criteria and select the sector. You’ll be able to see a whole list of sectors. Once you select one — in this case energy — you can sort by rating by clicking the three lines at the top of that column. 

Best,

Kelly Green