Jim Cramer says oil is the 'only dip that can be bought right now' - here are 3 blue-chip energy stocks that also provide yields as high as 9%




  • In Business
  • 2022-07-06 20:15:00Z
  • By MoneyWise
Jim Cramer says oil is the ‘only dip that can be bought right now’ — here are 3 blue-chip energy stocks that also provide yields as high as 9%
Jim Cramer says oil is the ‘only dip that can be bought right now’ — here are 3 blue-chip energy stocks that also provide yields as high as 9%  

With the market down double-digits in 2022, a lot of stocks seem to be on sale.

But not all of the beaten-down names are worth buying at the moment, according to CNBC's Jim Cramer.

"I want to be kind to this market and tell you it's the same old buy the dips game plan. But in reality, the only dip that can be bought right now, at least, is the dip in oil," Cramer says. "Everything else is, as they now say in a damning way, transactional and nothing more."

The Mad Money host notes that when sellers start selling oil stocks, buyers would come in and keep the prices up. And that makes the sector stand out compared to the rest of the market.

"Prices are going higher at the pump, and nobody but the president can do anything about it - and even he can't do all that much," he explains. "Either way, the lesson is simple: Just get long on some oil stock."

So here's a look at three stocks from the sector that Wall Street finds attractive. They also pay healthy dividends.

  • Mitt Romney says a billionaire tax will trigger demand for these two physical assets - get in now before the super-rich swarm

  • Stocks are down, but "cash is not a safe investment," says Ray Dalio - get creative to find strong returns

  • Warren Buffett likes these 2 investment opportunities outside of the stock market

Exxon Mobil (XOM)

Let's start with one of the largest blue-chip stocks in the energy space: Exxon Mobil.

Thanks to strong commodity prices, the oil-producing giant gushes profits and cash flow. In Q1, Exxon earned $5.5 billion in profits, a huge increase from the $2.7 billion in the year-ago period. Free cash flow totaled $10.8 billion for the quarter, compared to $6.9 billion in the same period last year.

Solid financials allow the company to return cash to investors. Exxon pays quarterly dividends of 88 cents per share, translating to an annual yield of 4.2%. Management has also increased the company's share repurchase program to up to $30 billion through 2023.

Last month, Evercore ISI analyst Stephen Richardson upgraded Exxon from 'in line' to 'outperform' and set a price target of $120 - implying potential upside of 44%.

Enterprise Products Partners (EPD)

Moving up the yield ladder we have Enterprise Products Partners, which operates approximately 50,000 miles of natural gas, natural gas liquid (NGL), crude oil, refined products, and petrochemical pipelines.

Structured as a master limited partnership, EPD pays oversized cash distributions to investors and grows them over time. Right now, the stock yields a generous 7.8%.

The partnership is outearning its payout. In Q1, EPD generated record distributable cash flow of $1.8 billion, which provided 1.8 times coverage of its quarterly distribution.

After EPD reported Q1 results, Mizuho analyst Gabriel Moreen reiterated a Buy rating on the stock and raised the price target from $30 to $32 - roughly 35% above where the stock sits today.

Magellan Midstream Partners (MMP)

Magellan Midstream is another high-yield master limited partnership well-positioned for this commodity cycle.

Magellan has 9,800 miles of refined products pipelines, 54 connected terminals, and two marine storage terminals. It also owns around 2,200 miles of crude oil pipelines and storage facilities with an aggregate storage capacity of approximately 39 million barrels.

The partnership pays quarterly distributions of $1.0375 per unit, giving the stock an enticing annual yield of 9.0%. Management expects Magellan to generate enough cash to cover its payout 1.24 times this year.

In May, JPMorgan analyst Jeremy Tonet upgraded Magellan from neutral to overweight. He also raised the price target to $57 - around 24% higher than the current levels.

What to read next

This article provides information only and should not be construed as advice. It is provided without warranty of any kind.

COMMENTS

More Related News

'100x better than gold': Michael Saylor says bitcoin is the next big 'store of value asset' and will soar 2,500% within 10 years - here are 3 easy ways to bet on it

The world's largest cryptocurrency is down. But not out.

1.6 million Americans are about to get an average $750 back from the IRS - could you be one of them?
1.6 million Americans are about to get an average $750 back from the IRS - could you be one of them?

The tax agency is about to hand out more than a billion dollars to taxpayers.

Trump Is Battling a New York Law Used to Take on Corporate Giants
Trump Is Battling a New York Law Used to Take on Corporate Giants

For decades, the New York attorney general's office has relied on a little known but powerful law to take on what it sees as the most egregious corporate...

'You fight inflation with economic pain': Billionaire Ray Dalio just issued dire warning to investors - this is what he holds to prepare for the tough times ahead

The hedge fund legend has spoken. Pay attention.

Leave a Comment

Your email address will not be published. Required fields are marked with *

Cancel reply

Comments

  • webpage
    (2022-07-07 08:39:13Z)

    I gott this web site from my paal who told me about this
    website and now this time I am visiting this web site and readung very informatife articles
    or reviews aat this time.
    Bombeo muscular para hombres webpage calidad

    REPLY

Top News: Business