Oil stocks are among the worst performers in August, historically speaking
Oil stocks have been in the spotlight today, with blue chips
Exxon Mobil Corporation (NYSE:XOM) and Chevron Corporation (NYSE:CVX) fresh out of the earnings confessional. In addition, crude oil futures are
attempting to claw back from three-month lows. However, historically speaking, traders may want to exercise caution before scooping up energy stocks in August, with drilling concerns
Patterson-UTI Energy, Inc. (NASDAQ:PTEN) and
Helmerich & Payne, Inc. (NYSE:HP) performing especially poorly over the past decade.
Schaeffer's Senior Quantitative Analyst Rocky White crunched the numbers to come up with the worst August performers over the past 10 years, and nine of the 25 stocks fell under the "Oil" or "Oil Service" umbrellas. Specifically, White only considered stocks that trade at least a million shares a day or weekly options. Below are the results (and
click here for the 25 best performers in August):
To hammer that home, the United States Oil Fund LP (ETF) (USO) has ended August with a loss in seven of the past 10 years. For comparison, the S&P 500 Index (SPX) has ended August with a gain in six of the past 10 years, even during the financial crisis.
As you can see,
PTEN is second runner-up on the Worst of August list. The stock has averaged an August loss of 5.2% going back 10 years, and has been positive on the month just once. The equity is on pace for a July loss of 9.1% -- last seen at $19.40 -- no thanks to yesterday's poorly received earnings report. Since hitting an annual high of $22.12 in early June, the shares have backed down from their 36-month moving average in the $22 area -- in the range of a 38.2% Fibonacci retracement of PTEN's August 2014 high to its January 2016 low -- and blew right past its
historically supportive 40-day trendline.
On the sentiment side, options traders have been ramping up their bearish bets during the past two weeks. On the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX), PTEN's 10-day put/call volume ratio sits at a lofty 22.03 -- higher than 79% of all other readings from the past year. In the same vein, short interest accounts for 12.6% of the stock's float, and would take nearly a week to buy back, at PTEN's average daily trading volume.
HP touched an annual high of its own earlier this month, peaking at $70.28. However, in the wake of another earnings miss yesterday and crude oil's recent struggles, the equity is now on pace for a month-to-date loss of 8%, last seen at $61.84. The stock is also set to end beneath both its 10- and 20-week moving averages for the first time since mid-February, but could find an ally in the round-number $60 region, which has acted as both support and resistance since late 2014.
Historically, HP has averaged an August loss of 4.7% over the past 10 years, making it the second-worst oil stock behind only PTEN. Further, the equity has ended the month on a positive note just once in the last decade.
Similar to PTEN, most of Wall Street is already skeptical of HP. Short interest represents nearly 24% of the equity's total available float, and would take more than 16 sessions to repurchase, at HP's average daily trading volume.
The stock's 10-day ISE/CBOE/PHLX put/call volume ratio of 9.45 indicates that traders have bought to open more than nine puts for every call during the past two weeks. This ratio is higher than 83% of all others from the past year, hinting at a healthier-than-usual appetite for bearish bets lately.
However, whether bullish or bearish on the short-term future of Patterson-UTI Energy, Inc. (NASDAQ:PTEN) and Helmerich & Payne, Inc. (NYSE:HP), one thing is certain: near-term options can be had at a relative bargain. HP's Schaeffer's Volatility Index (SVI) of 38% is higher than just 12% of all others from the past 52 weeks, and PTEN's SVI of 46% is in the 14th percentile of its annual range. In other words, HP and PTEN have attractively priced short-term premiums right now, historically speaking.
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