The coronavirus pandemic that Saudi Arabia used to launch an all-out war for global market share has turned into an absolute rout. Nearly every corner of the oil world has been affected, and billions of dollars in investor capital has already been destroyed. Eventually the market will turn and there will be big winners after the oil crash, but now is a time for caution.
It's barely two months in, and the bankruptcies have already started. So before you rush into the oil patch looking for big gains on a bet that the economy opens back up soon and demand for oil rebounds, keep reading. The oil patch is in a massive mess that could take a year or more to correct, and more companies are going to struggle badly and destroy lots more shareholder equity before it gets better.
Five oil stocks in particular that investors should avoid are Occidental Petroleum (NYSE: OXY), Oasis Petroleum (NYSE: OAS), Halliburton Co (NYSE: HAL), Chesapeake Energy (NYSE: CHK), and Valaris plc (NYSE: VAL). As you can see from this list of names, it's not just shale oil producers at risk. Companies on land and offshore, and in other various parts of the industry, are set for a lot of pain to come.
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Source: Motley Fool
(May 2, 2020 - 4:00 PM EDT)
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