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2 Great Stocks You Can Buy on Sale

Reuben Gregg Brewer, The Motley Fool

The market is near all-time highs again as this bull market continues to extend its historically long run. It's hard to find anything that's on sale in this environment unless you're willing to look at stocks that have some negatives. Energy sector stalwarts ExxonMobil (NYSE: XOM) and Helmerich & Payne (NYSE: HP) fall into that category, offering up yields of 4.5% and 5.6%, respectively. Despite the negatives that have put them on the sale rack, they remain attractive because they both have rock-solid balance sheets that should see them through the current troubles. Here's why this pair of great stocks should be on your buy list today.

1. Doubling down on oil

Exxon is one of the world's largest integrated oil and natural gas companies, with operations that span the upstream (drilling), midstream (pipelines), and downstream (chemicals and refining) sectors. But investors are worried about the company's execution within an industry that's seen as dying at the hands of renewable power alternatives.

A hand drawing a scale that is weighing value and price

Image source: Getty Images.

Exxon is working on implementing its growth plans and starting to see some success. After three years of falling oil and gas production, it looks like there will be an uptick in 2019, if current production trends hold up. Onshore U.S. oil production is the main engine driving the production increases that started in mid-2018, but this is just one of several long-term projects Exxon has in the works. In fact, the company believes its current opportunity set is the best it's been since Exxon and Mobil merged. And while investors are hot on renewable power, Exxon believes a lot more oil will be needed even if the world gets serious about reducing carbon emissions. It predicts that 370 billion barrels of new supply will be needed even if the Paris climate accord's goal of limiting global temperature rise to 2 degrees Celsius is achieved, which isn't a given since many countries aren't living up to their promises today.

Meanwhile, Exxon has one of the strongest balance sheets among its peers, with long-term debt at just 10% or so of its capital structure. So it can afford to keep investing in its growth plans and supporting its hefty dividend even if oil prices fall. Which is why the stock is so attractive today, with a yield that's higher than it has been since the 1990s. Meanwhile, the company's price to tangible book value hasn't been this low since the 1980s.

XOM Price to Tangible Book Value Chart

XOM Price to Tangible Book Value data by YCharts .

Exxon fits the bill if you are looking for a financially strong company that offers a high yield and is trading at a depressed price. And the best part is that production prospects are starting to brighten already.

2. If more oil is needed

Next up is energy services provider Helmerich & Payne. The company builds, operates, and leases out drilling rigs. Its largest market by far is the U.S. onshore space (around 86% of revenue), the same market that is driving Exxon's production higher today . In fact, the U.S. is producing so much oil and natural gas that the country is now the largest producer in the world -- besting even Saudi Arabia. That advance is driven by huge drilling programs in the very markets that Helmerich & Payne serves.

Although utilization across the company's portfolio is modest at 62%, roughly 90% of its most technologically advanced onshore rigs are in the field today. That's an important statistic because Helmerich & Payne has long focused on leading the industry on the technology front. Its efforts have helped it gain over 5 percentage points of market share since oil peaked in 2014, and management shows no signs of pulling back on upgrading its portfolio. In fact, Helmerich & Payne's recent results have been better than analysts had expected .

Meanwhile, long-term debt is only around 10% of the capital structure -- far below any of its closest peers. So, like Exxon, Helmerich & Payne has the financial foundation to keep investing in its business and rewarding shareholders even during a time of modest demand. The yield has been toward the high end of its historical range since a dramatic increase in the dividend payout in 2014. And the stock's price to tangible book value is near its lowest levels over the past 20 years.

HP Price to Tangible Book Value Chart

HP Price to Tangible Book Value data by YCharts .

Helmerich & Payne's business is more variable than Exxon's, so the stock isn't a good choice for conservative investors. But if you can stomach a little volatility, Helmerich & Payne is an industry leader that's built to survive tough times.

One more stat to like

Exxon and Helmerich & Payne are financially strong players in the energy space that appear to have what it takes to remain industry-leading names. And they both look pretty cheap today. But that's not all: They also have incredible dividend histories. Exxon has increased its dividend every year for 37 consecutive years, while Helmerich & Payne's streak is even more impressive at 46 years. If you are looking for stocks that are on sale, Exxon and Helmerich & Payne fit the bill -- and they also happen to be great companies.

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Reuben Gregg Brewer owns shares of ExxonMobil. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy .