Here are Leon Cooperman’s stock picks for playing higher oil prices

Posted By: EN Todayon: September 07, 2023In: General Energy News, Oil & Gas News

Energy stocks should be poised to outperform even as the 2023 rally for the broader market runs out of gas, according to Omega Family Office chairman and CEO Leon Cooperman. The legendary investor said on CNBC’s ” Squawk Box ” on Thursday that he is skeptical that the wider market will make new highs this year but is overweight the energy sector. U.S. benchmark West Texas Intermediate crude hit its highest level of the year on Wednesday at just over $88 per barrel. “I think the price of oil will probably stay in the 80-to-90 zone, not go much higher. But at 80-to-90, these companies are coining money,” said Cooperman, who spent a quarter century at Goldman Sachs before founding Omega in the early 1990s. An example of a company in Cooperman’s portfolio that is benefiting from higher oil prices is Paramount Resources , which primarily trades in Canada. “They produce oil at $31 per barrel. They’re growing production at 50% rate. … They’re generating cash well in excess of their dividend and cap-ex,” Cooperman said, referring to Paramount’s capital spending. Omega also owns stock in several U.S. energy companies, including Energy Transfer . The stock has outperformed the energy sector year to date and has a dividend yield of 9.2%. “Huge insider buying. Stock yields over 9%. Why would I want to buy a government bond at 4% if I can get 9-plus-percent yield in something where I’m seeing management, who is very smart, buying their stock literally almost every day,” Cooperman said. ET YTD mountain Energy Transfer has outperformed the energy sector this year. Cooperman added that his most recent purchase is DT Midstream , which was spun out of DTE Energy in June 2021. The stock has fallen about 8.5% this year but sports a dividend yield above 5%. “An excellent, well-run company that I think is a potential take-over candidate,” Cooperman said. Outside of energy stocks, Cooperman’s portfolio includes Alphabet , Microsoft , Apollo , Citigroup , Cigna . He also owns Fidelis Insurance , which Cooperman said can benefit from rising interest rates.