What are we looking for?
The walking wounded of the oil patch.
The crash in oil prices has left the Canadian energy sector teeming with casualties. Few have been spared. Of the 66 stocks included in the S&P/TSX energy index, just five have advanced in the two months since the Organization of Petroleum Exporting Countries announced it would not be cutting back on crude oil production in response to declining global benchmark prices.
Since that decision, an excess of global supply has pushed crude prices down by almost 40 per cent, taking nearly every major Canadian energy name down with them.
We sought to identify the stocks on which the greatest damages have been inflicted.
How did we do it?
We simply screened for the 20 biggest losers in the S&P/TSX energy index over the past two months.
And to further explore how the market views these stocks, we added a few other metrics: price-to-earnings ratio; enterprise value to earnings before interest, taxes, depreciation and amortization; and dividend yield.
What did we find?
For the Canadian investor heavily exposed to the energy sector, the results reveal an itemized list of woe. None of the 20 stocks were spared a share price decline of at least 30 per cent since late November.
The single biggest loser was Lightstream Resources, which has a heavy debt burden and was forced to eliminate its dividend. Many other names on the list have cut or discontinued quarterly payments, while the remaining dividend payers have yields ranging from 5.7 per cent to 19.4 per cent, suggesting that investors have little faith that those dividends will be paid.
Half of the stocks have losses forecasted over the next year. Those still expected to be profitable have an average forward P/E of 24.3, which is quite high considering those 10 stocks have declined in price by an average of 40 per cent in the past two months.
To contrarian investors bullish on oil, this list could be mined for buying opportunities. Most will see stocks to steer well clear of. As always, investors should conduct their own research.