While a slowdown looks inevitable, the U.S. economy might narrowly avoid a recession this year. Moreover, experts believe the stock market can recover in 2023. Therefore, investors might consider buying quality momentum stocks Schlumberger (SLB), Overseas Shipholding (OSG), Epsilon Energy (EPSN), and Adams Resources & Energy (AE) now. Keep reading….
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A slowdown seems inevitable for the U.S. economy in 2023. However, according to Moody’s Analytics, a “slowcession” is more probable, where growth gets stunted, yet a full economic downturn is narrowly avoided.
Moody’s Analytics chief economist Mark Zandi believes, “Inflation is quickly moderating, and the economy’s fundamentals are sound. With a bit of luck and some reasonably deft policymaking by the Fed, the economy should avoid an outright downturn.”
Moreover, JP Morgan expects the market to rebound in 2023. The investment firm expects S&P 500 to hit 4,200 by the end of this year. Given the backdrop, investors might consider buying quality momentum stocks, Schlumberger Limited (SLB), Overseas Shipholding Group, Inc. (OSG), Epsilon Energy Ltd. (EPSN), and Adams Resources & Energy, Inc. (AE) now.
Investors’ interest in momentum stocks is evident from the SPDR S&P 1500 Momentum Tilt ETF’s (MMTM) 5% gains over the past three months and 2.5% gains over the past six months.
Schlumberger Limited (SLB)
SLB provides technology for the energy industry worldwide. The company operates through four divisions: Digital & Integration; Reservoir Performance; Well Construction; and Production Systems.
On October 31, 2022, SLB and Linde PLC (LIN) entered into a strategic collaboration on carbon capture, utilization, and sequestration (CCUS) projects to accelerate decarbonization solutions across industrial and energy sectors. This venture is expected to promote sustainable development.
SLB’s revenue is expected to come in at $7.48 billion for the third quarter that ended September 30, 2022, up 27.9% year-over-year. Its net income came in at $907 million, up 64.9% year-over-year, while its EPS came in at $0.63, up 61.5% year-over-year.
SLB’s revenue is expected to increase 16.3% year-over-year to $32.59 billion in 2023. Its EPS is expected to increase 39.1% year-over-year to $2.99 in 2023. It surpassed EPS estimates in all four trailing quarters.
Over the past year, the stock has gained 62.4% to close the last trading session at $51.50. It’s trading above its 200-day moving average of $42.51.
SLB’s promising prospects are reflected in its POWR Ratings. The stock has an overall B rating, which indicates a Buy in our proprietary rating system. The POWR Ratings assess stocks by 118 different factors, each with its own weighting.
SLB has an A grade for Momentum and a B grade for Growth, Sentiment, and Quality. Within the B-rated Energy – Services industry, it is ranked #15 out of 42 stocks. Click here to see the additional POWR Ratings for Value and Stability for SLB.
Overseas Shipholding Group, Inc. (OSG)
OSG and its subsidiaries own and operate a fleet of oceangoing vessels. Its vessels are engaged in the transportation of crude oil and petroleum products in the United States flag trade.
On November 3, 2022, Sam Norton, OSG’s President, and CEO, said, “Financial results achieved during the past quarter provide a welcome affirmation of our long-held belief in the viability of OSG’s business strategy, exceeding our expectations and signaling continued strength through the balance of the year and into 2023.”
OSG’s total revenues came in at $123.06 million for the third quarter that ended September 30, 2022, up 31% year-over-year. Its voyage charter revenues came in at $30.33 million, up 3% year-over-year. Moreover, its net income came in at $13.25 million compared to a loss of $16.01 million in the year-ago period.
Over the past year, the stock has gained 53.1% to close the last trading session at $2.94. It’s trading above the 50-day and 200-day moving averages of $2.88 and $2.56.
OSG’s POWR Ratings reflect its strong fundamentals. It has an overall A rating, which indicates a Strong Buy in our proprietary rating system.
It has an A grade for Momentum and Quality and a B for Growth and Value. OSG is ranked first among 45 stocks in the A-rated Shipping industry. Click here to see the additional POWR Rating for Stability and Sentiment for OSG.
Epsilon Energy Ltd. (EPSN)
EPSN acquires, develops, gathers, and produces oil and gas reserves in the United States. It operates through Upstream and Gathering System segments.
On November 10, 2022, Jason Stabell, EPSN’s CEO, said, “We are poised for continued success in the current commodity price environment and are well-positioned to pursue attractive organic and inorganic growth opportunities.”
EPSN’s total revenue came in at $21.24 million for the third quarter that ended September 30, 2022, up 62.2% year-over-year. Its net comprehensive income came in at $9.57 million, up 585.6% year-over-year, while its EPS came in at $0.41, up 583.3% year-over-year.
Over the past year, the stock has gained 11.5% to close the last trading session at $6.41.
It’s no surprise that EPSN has an overall A rating, which equates to a Strong Buy in our proprietary rating system. In addition, it has an A grade for Momentum and Quality.
EPSN is ranked #2 out of 93 stocks in the B-rated Energy – Oil & Gas industry. Click here to get all the EPSN ratings (Growth, Value, Stability, and Sentiment).
Adams Resources & Energy, Inc. (AE)
AE and its subsidiaries market, transport, terminal, and store various crude oil and natural gas basins in the United States. Its three segments are Crude Oil Marketing, Transportation, and Storage; Tank truck Transportation of Liquid Chemicals, Pressurized Gases, Asphalt, and Dry Bulk; and Pipeline Transportation, Terminalling, and Storage of Crude Oil.
On November 11, 2022, AE’s CEO, Kevin J. Roycraft, said, “The new Adams operating structure is designed to grow profitability through strategic, disciplined operational excellence and growth within each respective business segment, all for the long-term benefit of our shareholders.”
For the third quarter ended September 30, 2022, AE’s total revenues came in at $852.90 million, up 50.1% year-over-year. Its net earnings came in at $2.19 million, up 41.7% year-over-year. Also, its EPS came in at $0.50, up 38.9% year-over-year.
AE’s revenue is expected to be $801.89 million for the yet-to-be-reported quarter ending December 2022, representing a 24.4% year-over-year rise. Its EPS is expected to increase 37.5% year-over-year to $0.88 for the same period.
Over the past year, the stock has gained 34.7% to close the last trading session at $38.00. It is trading above the 50-day moving average of $37.86.
AE has an overall A rating, equating to a Strong Buy in our proprietary rating system. It has an A grade for Momentum and Sentiment and a B grade for Value and Quality.
AE is ranked #3 in the Energy – Oil & Gas industry. Click here to see AE’s ratings for Growth and Stability.
SLB shares fell $0.84 (-1.63%) in premarket trading Wednesday. Year-to-date, SLB has declined -3.67%, versus a -0.42% rise in the benchmark S&P 500 index during the same period.
About the Author: Riddhima Chakraborty
Riddhima is a financial journalist with a passion for analyzing financial instruments. With a master’s degree in economics, she helps investors make informed investment decisions through her insightful commentaries.
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