3 Energy Stocks Short Sellers Are Drilling Into: Is the Rally Running on Empty?

InvestorPlace04-04

These are three risky energy stocks that short sellers are targeting today. Occidental Petroleum (OXY): The firm has made numerous risky bets, with its current carbon capture play drawing bearish ...

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It's time to be cautious with these three energy stocks short sellers are targeting.","collect":0,"end_time":0,"defaultTopTitle":"investorplace.com","property":[],"viewcount":null,"language":"en","relate_stocks":{"LU0048573561.USD":"FIDELITY AMERICA \"A\" (USD) INC","LU0053666078.USD":"摩根大通基金-美国股票A（离岸）美元","IE00B775SV38.USD":"NEUBERGER BERMAN US MULTICAP OPPORTUNITIES \"A\" (USD) ACC","OXY":"西方石油","IE00B3S45H60.SGD":"Neuberger Berman US Multicap Opportunities A Acc SGD-H","BK4585":"ETF&股票定投概念","LU0417517546.SGD":"Allianz US Equity Cl AT Acc SGD","BK4534":"瑞士信贷持仓","VLO":"瓦莱罗能源","CCJ":"Cameco Corp","IE00BKDWB100.SGD":"PINEBRIDGE US LARGE CAP RESEARCH ENHANCED \"A5H\" (SGDHDG) ACC","LU1914381329.SGD":"Allianz Best Styles Global Equity Cl ET Acc H2-SGD","BK4533":"AQR资本管理(全球第二大对冲基金)","LU0234572021.USD":"高盛美国核心股票组合Acc","LU0640476718.USD":"THREADNEEDLE (LUX) US CONTRARIAN CORE EQ \"AU\" (USD) ACC","IE00B1XK9C88.USD":"PINEBRIDGE US LARGE CAP RESEARCH ENHANCED \"A\" (USD) ACC","LU1280957306.USD":"THREADNEEDLE (LUX) US CONTRARIAN CORE EQUITIES \"AUP\" (USD) INC","LU1363072403.SGD":"Fidelity Global Financial Services A-ACC-SGD","LU0251142724.SGD":"Fidelity America A-SGD","DK":"Delek US Holdings","IE00BSNM7G36.USD":"NEUBERGER BERMAN SYSTEMATIC GLOBAL SUSTAINABLE VALUE \"A\" (USD) ACC","BK4588":"碎股","LU0130102774.USD":"Natixis Harris Associates US Equity RA USD","BK4550":"红杉资本持仓","LU0368265418.SGD":"Blackrock World Energy Fund A2 SGD-H","LU0256863811.USD":"ALLIANZ US EQUITY \"A\" INC","LU0648001328.SGD":"Natixis Harris Associates US Equity RA SGD","IE00BWXC8680.SGD":"PINEBRIDGE US LARGE CAP RESEARCH ENHANCED \"A5\" (SGD) ACC","BK4591":"室温超导概念","LU0971096721.USD":"富达环球金融服务 A","BK4156":"煤与消费用燃料","LU1074936037.SGD":"JPMorgan Funds - US Value A (acc) SGD","LU0122376428.USD":"贝莱德世界能源基金A2","BK4581":"高盛持仓","BRK.B":"伯克希尔B","LU0300736492.USD":"FRANKLIN NATURAL RESOURCES \"A\" (USD) INC","LU1201861249.SGD":"Natixis Harris Associates US Equity PA SGD-H","BK4201":"综合性石油与天然气企业","LU0742534661.SGD":"Fidelity America A-SGD (hedged)","LU0980610538.SGD":"Natixis Harris Associates US Equity RA SGD-H","BK4138":"石油与天然气的炼制和营销","LU0149725797.USD":"汇丰美国股市经济规模基金","SG9999001440.SGD":"United Global Dividend Equity Fund A SGD Dist","BK4176":"多领域控股","LU0234570918.USD":"高盛全球核心股票组合Acc Close","LU1571399168.USD":"ALLSPRING GLOBAL LONG/SHORT EQUITY \"IP\" (USD) ACC"},"translate_title":"卖空者正在钻研的3只能源股：涨势是空的吗？","themeId":null,"isJumpTheme":false,"ttsUrl":null,"symbols_score_info":{"VLO":1,"DK":1,"CCJ":1,"OXY":1,"BRK.B":0.9},"content_text":"These are three risky energy stocks that short sellers are targeting today.\nOccidental Petroleum (OXY): The firm has made numerous risky bets, with its current carbon capture play drawing bearish scrutiny.\nCameco (CCJ): The rally in uranium energy stocks has gotten way ahead of itself.\nDelek US (DK): This refining company is selling at a sky-high P/E multiple compared to peers.\n\n\n\n\n\n \n\nSource: Borka Kiss / Shutterstock.com\n\n\n\nInvestors are getting excited about the energy sector. The price of crude oil has topped $86 per barrel once again and is now at its highest level in months. Geopolitical uncertainty has played into the move. With the conflict in the Middle East and the ongoing problems with Russia, investors are pricing potential supply constraints into the oil market. \nIn addition, the economy continues to run hotter than expected and inflation remains above long-term targets. This inflation-driven economic backdrop should be supportive for energy prices. \nIt’s not just crude oil either. Investors are starting to price in the need for more electricity capacity, thanks to the surge in artificial intelligence applications. This has led to investor excitement in uranium stocks as the price of spot uranium soars.\nBut not everyone is convinced that the skies are clear for energy stocks. Short sellers are increasing their bets against the sector. In particular, they’re picking on these companies as having significant downsides.\nThese are three energy stocks short sellers are targeting for sizable losses later in 2024. All three have at least 5% of their outstanding shares floated, indicating that bears are betting heavily on significant decline in these energy stocks going forward.\nOccidental Petroleum (OXY)\nSource: T. Schneider / Shutterstock.comOccidental Petroleum (NYSE:OXY) is one of the larger oil and gas companies out there with a market capitalization of more than $50 billion. \nIt is also a controversial one. The company levered up its balance sheet with the aggressive acquisition of Anadarko Petroleum just prior to the onset of the Covid-19 pandemic. Occidental turned to Warren Buffett’s Berkshire Hathaway (NYSE:BRK-A, NYSE:BRK-B) to receive much-needed funding for that deal.\nThe company has its defenders — many people that follow Berkshire have taken a position in OXY stock. Bears, however, do not trust the company’s management team. They feel that Occidental has deployed capital poorly over the years. \nOccidental is making another huge bet also, as it is investing a large portion of its capital into carbon capture. In theory, carbon capture is going to become a large market and Occidental could enjoy a considerable first mover advantage. \nHowever, the economics are still largely unproven. If Occidental misfires here, it would be another blunder on top of the company’s already spotty track record. With the price of oil surging, many investors may prefer to buy energy companies that have stuck to their knitting rather than making a big bet on less proven carbon capture investments.\nCameco Corp. (CCJ)\nSource: shutterstock.com/RHJPhtotoandilustrationUranium stocks are sizzling right now. It’s been a huge turn of events for the long-beleaguered sector.\nAfter the Fukushima disaster in Japan, it seemed that nuclear power was on the way out. There were significant shutdowns of nuclear power capacity in Japan and Germany, and it appeared many aging plants in the U.S. would be heading for their final moments as well. Now, though, some plants are seeing their lives extended and new plants are in the works.\nWith the increasing focus on green energy, nuclear is proving to be a valuable carbon-free power source. It can serve as a bridge fuel as well, helping decarbonize the economy while other renewable energy sources scale up.\nInvestors have started taking advantage of this trend as physical uranium demand is now outstripping supply — long story short, the price of uranium has soared. \nThat’s great for Cameco (NYSE:CCJ), which is one of the world’s largest uranium mining companies. CCJ shares have jumped about fourfold from the lows. \nBears think that traders are getting ahead of themselves. Cameco’s actual profitability remains quite limited — shares are trading at about 80 times trailing earnings. Analysts are modeling a large jump in earnings for 2024, even so CCJ stock trades at 48 times forward earnings. That’s rather pricy for an energy or mining firm. The stock also goes for four times book value and pays a mere 0.19% dividend yield — both figures screen poorly compared to most energy stocks.\nDelek US (DK)\nSource: Casimiro PT / Shutterstock.comDelek (NYSE:DK) is an independent refining company with a roughly $2 billion market capitalization. Delek is not the largest refining operation by any means, but it has enough scale to earn its keep in the industry.\nHistorically, refining was viewed as a low margin not very attractive industry. However, due to political and environmental obstacles, it has become almost impossible to build new refineries in North America. That, in turn, has made existing refining assets more valuable. \nIn addition, the fracking and shale boom has created much more domestic oil supply, such as from the Permian Basin. This creates cheaper feedstocks for American refining operations, including Delek. These domestic refiners have enjoyed a sharp jump in profitability in recent years.\nThe sector was disrupted by the pandemic and a drop in vehicle miles driven. But things came roaring back and valuations have rocketed. In the case of Delek, short sellers think the valuation has gotten much too steep with the stock jumping from a low of around $10 during the pandemic to more than $30 now. \nDelek was barely profitable in 2023. Even setting aside last year as an aberration, analysts see Delek trading at nearly 108 times forward earnings. Bears would argue that this is far too high both for a refiner in isolation and also in comparison to a rival like Valero (NYSE:VLO), which is trading at about 7 times forward earnings. Short sellers think that DK stock has significant downside ahead as its valuation falls toward the median energy stock going forward.\nOn the date of publication, Ian Bezek did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.\nIan Bezek has written more than 1,000 articles for InvestorPlace.com and Seeking Alpha. He also worked as a Junior Analyst for Kerrisdale Capital, a $300 million New York City-based hedge fund. You can reach him on Twitter at @irbezek.\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\nSubmit\n\n\n\n\n\n\n\nArticle printed from InvestorPlace Media, https://investorplace.com/2024/04/3-energy-stocks-short-sellers-are-drilling-into-is-the-rally-running-on-empty/.\n©2024 InvestorPlace Media, LLC","kind":null,"is_publish_news":null,"is_publish_highlight":null,"is_publish_live":null,"is_publish_wemedia":null,"editions":null,"symbols":[],"gpt_button":1},"commentList":[],"isCommentEnd":true,"newsSizeData":{"likeSize":0,"commentSize":0,"repostSize":0,"favoriteSize":0,"likeStatus":false,"favoriteStatus":false},"APP":{"userAgent":"Mozilla/5.0 AppleWebKit/537.36 (KHTML, like Gecko; compatible; ClaudeBot/1.0; +claudebot@anthropic.com)","isDev":false,"isTTM":true,"deviceId":"web-server-community-laohu8-v3","version":"4.22.4","shortVersion":"4.22.4","platform":"web","vendor":"web","appName":"ttm","isIOS":false,"isAndroid":false,"isTiger":false,"isTHS":false,"isWeiXin":false,"isWeiXinMini":false,"isWeiBo":false,"isQQ":false,"isBaiduSwan":false,"isBaiduBox":false,"isDingTalk":false,"isToutiao":false,"isOnePlus":false,"isHuaWei":false,"isXiaomi":false,"isXiaomiWebView":false,"isOppo":false,"isVivo":false,"isSamsung":false,"isMobile":false},"href":"/m/news/2425149343"}