Over the past 12 months, energy companies have averaged 13% growth in earnings per share — nearly three times their 20-year average, explains blue-chip investing expert Richard Moroney, editor of Dow Theory Forecasts.

The sector’s 12-month sales growth of 15% is nearly double both its historical norm and the current S&P 1500 average. The average energy stock trades at 21 times trailing earnings, roughly in line with its long-term norm of 21.

Based on estimated 2019 profits, the sector has a forward P/E ratio of 16, or 18% below historical norms — a bigger discount than any of the index’s other 10 sectors. The average stock in the broad index trades roughly in line with its 20-year norms.

We recommend two energy stocks, both of which earn solid Value scores: Chevron (CVX) and Marathon Petroleum (MPC).

Investors seeking more energy exposure may want to consider the following two stocks — with attractive dividends and valuations. No factor has been more effective than the price/sales ratio, which has outperformed by an average of 19% over the past year, 7% over the past 10 years, and 6% in 12-month periods since 1994.

Chevron (CVX) generated $8.26 billion in free cash flow in the 12 months ended March, following years of negative free cash fl ow due to heavy capital investment.

One risk of rising cash flow is that executives may indulge in empire-building fantasies by chasing costly acquisitions. In contrast, Chevron has shown fiscal discipline by not plunging into a bidding war for takeover target Anadarko Petroleum (APC). Instead, management plans to pursue smaller deals while repurchasing $5 billion of stock this year.

Long-term prospects for Chevron and many other energy giants hinge on the future global demand for oil, a justifi able concern for investors, as renewable energy sources, such as wind and solar, gain in popularity.

Apple’s (AAPL) entire corporate operation runs solely on renewable energy, while J.P. Morgan (JPM) expects to wean itself off traditional energy sources entirely by next year.

But the end of oil is not imminent. Global oil consumption rose 1.5% in 2018 and is projected to increase 1.4% this year and 1.5% in 2020, according to the U.S. Energy Information Administration.

Chevron’s stock has rallied 11% this year, but its valuation still seems to reflect plenty of pessimism. At 16 times trailing earnings, the shares trade well below their own five-year average of 23 and the S&P 1500 energy- sector average of 21. Chevron, yielding 3.9%, is a Buy and a Long-Term Buy.

Marathon Petroleum (MPC) shares have slumped 12% in 2019, hurt by a soft March quarter report. The refining business suffered from high inventories, seasonally light demand, and unfavorable weather.

Fortunately, management noted that conditions have improved in the past month. Recent weakness leaves Marathon shares looking exceptionally cheap based on price/sales ratio, the sector’s most effective Quadrix factor in both the past year and past decade.

Marathon trades at 0.3 times trailing sales and eight times trailing earnings, both representing more than a 17% discount to their five-year norms and the current industry median. Marathon ranks in the top quintile of energy stocks for both its dividend yield of 4.1% and its five-year annualized dividend growth of 19%.

In each of the past two years, Marathon raised its dividend 15%, higher than any other refi ner in the S&P 1500 Index. Strong cash-flow trends should support future dividend growth. Marathon is a Focus List Buy and a Long-Term Buy.

Investors seeking more energy exposure may want to consider the following two stocks — with attractive dividends and valuations.

EOG Resources (EOG) earns a Quadrix Overall score of 96, supported by a Momentum rank of 91, Value rank of 70, and Earnings Estimates rank of 92. The stock yields just 1.2%, but management has grown the dividend at an annualized rate of 20% over the past five years.

The driller focuses on the U.S. (98% of sales and 97% of operating profi t for the 12 months ended March), along with small operations in Trinidad and China. Oil accounts for about half of EOG’s U.S. proved reserves, with the rest fairly evenly balanced between natural gas and natural-gas liquids.

Oil refiner Phillips 66 (PSX) ranks in the top quintile of S&P 1500 Index energy stocks for four Quadrix factors that have consistently worked well for the sector: five-year dividend growth, dividend yield, gross-profit-margin trend, and price/sales ratio.

Phillips has raised its dividend at an annualized rate of 18% over the past five years. That growth has helped push the stock’s dividend yield to 4.2%, above its five-year average of 2.9%. For the 12 months ended March, per-share profi ts more than doubled on 19% revenue growth.

Although both profits and sales are expected to contract this year, the shares already appear to reflect the modest expectations. At 12 times estimated 2019 earnings, the stock trades below its industry average of 13.

Phillips shares look cheap from most other angles — they trade at more than a 35% discount to their own three-year average and industry norms for trailing P/E ratio, price/sales, and price/operating cash flow.

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