Posts Tagged ‘oil stocks’
Keeping It Rolling—U.S. Energy Boom Good News for Railroad Stocks
By Mitchell Clark, B.Comm. for Profit Confidential
Railroad stocks as a group have returned to their 52-week highs. I like Union Pacific Corporation (NYSE/UNP) and Canadian National Railway Company (NYSE/CNI). They are the strongest of the group and are trading right at their all-time record highs.
These two companies are worth accumulating when they’re down. According to history, they are typically not down for long. Wall Street keeps edging their earnings estimates higher for 2013 and 2014. Railroad stocks are pretty good with their guidance.
Bakken oil (and natural gas) is a huge opportunity for the U.S. economy. The production boom is happening now, with all its benefits, disadvantages, and costs. But a lot of junior oil stocks playing this patch aren’t moving upward in the stock market in the face of weak oil prices. The Bakken oil boom itself is a counter play on rising prices.
Phillips 66 (NYSE/PSX), a real winner since being spun off from ConocoPhillips (NYSE/COP), recently announced it will ship Bakken oil from North Dakota to New Jersey by rail. According to the Association of American Railroads, in 2008, U.S. Class I railroads originated 9,500 carloads of crude oil. In 2011, the number was 66,000 carloads. The final number for 2012 is expected to exceed 200,000 carloads, and railroads are also expected to deliver large amounts of frac sand to drill sites. This is a seriously good trend for railroad stocks. The stock chart for Phillips 66 is featured below:
Chart courtesy of www.StockCharts.com
Of course, the Bakken oil boom has its consequences, and we’re not even talking environmentally. Make no mistake: big oil is not interested in U.S. energy independence. Its … Read More
Best Turnaround Trade in Years May Be on the Horizon
By Mitchell Clark, B.Comm. for Profit Confidential
The spot price of oil keeps taking it on the chin, while gasoline prices remain lofty, padding the pockets of the big integrated oil companies even more. What a great business to be in. Which is why, of course, a stock market portfolio should have some exposure to large integrated oil and gas companies.
U.S. domestic oil production continues to experience a renaissance, but Bakken oil stocks aren’t going up with oil prices stuck in the low $90.00s.
I’m still amazed at the strength of the major integrated oil and gas companies on the stock market. Here we have a glut of natural gas and declining oil prices; yet on the stock market, Chevron Corporation (NYSE/CVX) is trading at an all-time record high. Frankly, I like Chevron, and if the stock is at a record high with these fundamentals, just imagine where it will go when the cycle changes.
Speaking of which, a great trade may be coming down the pipeline, and it could be one of those rare buy low/sell high opportunities. The trade is in natural gas. It isn’t going to happen tomorrow, but natural gas prices are going to turn; and when they do, there will be a lot of organic leverage available in the right stocks. I’d be scoping the stock market now for candidates.
One group of stocks that are down right now and worth looking into is the small-cap oil and gas services stocks. Large-cap oil and gas services are doing better on the stock market, but there’s more growth available from Bakken oil and gas services than from in the Gulf of … Read More
The Only Way to Beat Rising Gasoline Prices
By Mitchell Clark, B.Comm. for Profit Confidential
With remarkable consistency, oil stocks continue to do great on the stock market. Even though spot oil seems to be stuck below $100.00 a barrel, gasoline prices have been going up for the last month, as U.S. refiners use January and February for maintenance shutdowns.
Any way you cut it, oil remains a huge part of our daily lives, and most oil stocks are trading at or very near their all-time record highs. I should qualify that—what I mean is that most big oil stocks are trading right at their highs. Even with the U.S. oil production boom (which is very real), smaller oil stocks just don’t go up in value unless the spot price is doing so as well.
I always love consistency in a stock market investment. Consistent growth in earnings, dividends, and share price is absolutely golden, considering the volatility we get in capital markets. Save for pumping from your own oil well, you can only beat rising gasoline prices by owning a part of the company, and the biggest ones offer some of the best consistency the stock market has to offer.
Consider Chevron Corporation (NYSE/CVX), which is one of the large, integrated oil stocks that are trading at their all-time record highs on the stock market. But the stock isn’t expensive, with a current price-to-earnings (P/E) ratio of 8.7. The company has about $11.00 a share in cash and a price-to-sales ratio of around one. Its long-term stock chart is below:
Chart courtesy of www.StockCharts.com
Chevron is a member of the Dow Jones Industrials and has an outstanding track record of increasing its quarterly dividends … Read More
Two Junior Oil Stocks Gushing with Opportunity in the New U.S. Oil Boom
By Mitchell Clark, B.Comm. for Profit Confidential
There is real growth in the U.S. economy, and it’s in the oil business. The boom that’s taking place right now in domestic oil and gas production is significant, and the whole industry is starting to see the benefits.
The one thing that we know about resource investing is that oil stocks won’t move unless the spot price is moving. That being said, I’ve got two companies to highlight for you—both companies are junior oil and gas producers with great forecasts. They are part of the next generation of growing oil and gas companies that are drilling and finding lots of oil in North Dakota and Montana.
One company with a strong financial forecast is Kodiak Oil & Gas Corp. (NYSE/KOG), based out of Denver. The company has oil and gas reserves concentrated in two Rocky Mountain basins, known as the Williston Basin of North Dakota and Montana and the Green River Basin of Wyoming and Colorado.
According to the company, in its third quarter (ended September 30, 2012), total oil and gas sales grew to $112 million, for a gain of 280% over the comparable quarter. With about 95% of total production in crude, the company’s average sales volume during the third quarter grew 301% to 15,855 barrels of oil equivalent per day (boepd). During the last two weeks of November 2012, the company’s net oil and gas sales averaged approximately 22,000 boepd. Fourth-quarter numbers should be announced on February 28.
Among the new generation of growing oil stocks, Kodiak is fairly expensive. The other growing producer is Northern Oil and Gas Inc. (NYSE/NOG), which is a Minnesota company … Read More
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