10 Things To Know Before Buying Undervalued Oil Stocks in 2020
Oil stocks are down, but before investing in oil stocks or buying the cheap oil stocks with high dividend, there are 10 factors you should consider including: oil …
What do you think about IPCO ruled by Lunin family?
I don't know whether electrification will go as fast as predicted. Cars that replaced horses also raised productivity. Will electric cars do the same or they only suppose to solve far-fetched ecology problems? Also even if rapid electrification is the case, the world would need more electricity. Solar and wind energy are of little help because of unsustainable output. There are physical limits on the hydro generation and it seems that nuclear power is out of favor since 2011. Moreover fundamentally nuclear generation leaves a little room to adjust power to day/night changes in its consumption. In the end, we have gas, oil, and coal. So I don't know about tailwinds and headwinds, but imo the farther the discourse from the reality the bigger the opportunity. I think that green energy is bullshit. So I have some Rosneft. I feel like a company that produces a barrel of oil for $3 is a fairly safe choice. Well, if I'm wrong I have Norilsk Nickel as well – it benefits from the ecology craziness a lot.
All oil models are wrong as they model oil as energy. Large portion of oil will go into plastic. We ll get plastic houses, bridges, roads and 1000 of new applications because you can 3d print plastic. You can print any piece on the spot, stronger than metal – carboplastic. So i buy oil on EV fear. EV will even speed up and increase oil demand as plastic has more added value. What do you think guys?
Sven – putting the FUN in FUNdamentals 😉
Buffett didn’t exercise the Occidental Petroleum warrants, Ted Weschler bought the common stock with his own money because he believes the stock is undervalued (which I agree with him on.
Thanks for the video Sven… I currently own 2 Energy stocks and have been looking for a 3rd with little luck. I'll likely go with a Services provider since I'm not a big fan of the drillers. I'm watching CoreLabs (CLB) closely. They're on the small side, but their reservoir analysis business has virtually zero competition. They're far from risk free, but risk/reward is looking better and better as the share price continues to fall. Not buying yet tho'.
BTW… I currently own Enbridge (ENB), which has been in my portfolio for a few years now and have a newer speculative position in Tellurian (TELL). The TELL spec is really a bet on management. I'm hoping they can recreate or possibly even better what they did with Cheniere (LNG) some years back. Multi-bagger potential over the next 5 years if so. Possible 100% loss if not. TBD…
The issue with suggesting that oil stocks are potentially renewable in the future is to remember there core business, the UK stock market classifies oil companies as a non renewable sector for classification this was recent change, to help clarify portfolio allocation for those wishing to avoid, or incorporate, makes sense as it is core business.
Sven please alert us when there is a fund containing Aramco that is purchasable on the NYSE, thanks.
Sven, have you looked into EOG? They have 8.4B in operating cash flow LTM. Let's say they need 2B in capex to maintain their competitive advantage. That's 6.4B in FCF for a company trading at 43B market cap, with the strongest balance sheet in the industry. Their breakeven price is way lower than competitors for Permian Basin shale, like around ~$25 vs $50 for competitors.
Thanks for these vids Sven! Please analyse NMC Health
Thanks for your insights. It was very tempting to put money in oil stocks. Now i will use it to pay of dept and education. As i said thank you.
Hi Sven, I have to disagree with you on that one. XOM and most of these companies have also downstream,midstream operations and own natural gas/lng projects. which means that if oil price goes down then the profit on their downstream will compensate for the loss of their upstream unit. china is a temporary situation while demand is growing big time as all electric cars will need to use natural gas or even coal(depends where you live) in order to charge their batteries. the electric car is no more than a play for politicians to draw votes and budgets using climate friendly policy and as a gadget for companies such as tesla. add to that fact that driving season is over the corner and demand will peak again as russia and saudi arabia budget is relying on oil and gas price, crack spreads will much higher and refiners will take all supply out there again leading to a much higher oil price. I think that if you will make a video that shows the production of barrels per day based on oil price and show the floor price as you did in the past with Silver then investors can understand better their risk.
???I'm not asking you for an advance I am asking you for your opinion: which could be a good mine to buy, in your opinion? In my opinion LUCRF could be a good one, but I am looking for having different types of mining materials. One more LIKE 325 because what you say about how they get fired. 🤝🤗🤝
Are you still long Vedanta?
Thoughts on APA:NYSE ?? i hear its a good one to buy
if the central bank bubble pops, wouldnt oil demand go down alot?
RDS. from 2015 to 2019: Sales +54,18%, EBITA +144%,Retained earnings +27%,OCF +62%,FCF+730%, Dividend +94%,Book value +26%. It is not seems like a sinking ship.
The oil is in bear market more than 11years. This condition have forced many companies clean their assets, let to the best ones, got rid of debt to be profitable again. For example, RDS-Ahad 158B retained earnings last year and TOTAL has a break even price around 30$. They have got also 28B in cash, money ready to deploy for instance to solar. If this is not bargain and if this is not a bear market hysteria then I am missing sth. Of course, we should keep our portfolio balanced. To the point of compounding, if we deploy dividends we will get more income.
Thanks for this article as I know you have "bargain shoppers" (like me) that follow you. I had been in an upstream company (EOG) which is the best of breed shale company since 2014 but finally sold out of that last year with a multiyear loss (was a great trading stock but I wasn't doing that). And finally abandoned KMI last week selling into strength, but still at a loss over 6 years. My renewable plays (TSLA, NEE, TERP) gains have far more than offset the energy losses. I agree the pain is not here yet (I rode out the 2014/15 dumpster fire). No tailwinds here.
16:12 wait for the rait praaisahh… Brate volim te… Samo naprijed…
People…. invest with Sven Carlin and get smarter…
When he says subscribe, then soup skribe… Ok… There are no buts or ifs… just do it… like Nike…
Sven: thanks for the great insight. An important question: when other countries GDP tanked, will the US dollar stay strong even the Global Economic collapses? as they seek for the higher interest rate of the US bond? What will be the US dollar in the further?
What about Russian oil companies like Gazprom Neft, Surgutneft etc?
One more idea: Isn’t it safer to invest into midstream companies like ENB or EPD? Theoretically they are not so dependent on oil prices as long as oil and gas is needed which likely will be next 50+ years..
Maybe if someone is tempted to invest into the future likely declining business of oil he or she could hedge with investing into renewables at the same time. It may be a mix of utilities, technology and materials, all of them growing long term no matter if oil is here to keep it’s pricing power or not – AQN, EMRAF, NEE/ NEP / BEP, RNW, NILSY/COPX, copper, nickel, manganese, graphite, cobalt mining, ALB/SQM or simply LIT, TAN, TSLA ;-),.. so many possibilities for hedging if the oil thesis is broken!
This is quality thing
coking coal/ metallurgical coal is similarly hated but unquestionably essential
Glad you’re doing aviation next. Oil prices will benefit them, the 737 Max’s returning and eventually the virus concerns going away.
So commodities, what's really interesting is that they are the only things that are technically "cheap" right now. There is clearly a bubble in bonds and equities (stocks) so if those bubbles burst where will the "big money" flow. After all, it has to go somewhere. Well, the only things out there are commodities. What's scary is if I'm right that would push up inflation at a time when we would want central banks to cut interest rates but with high inflation, they would have to raise them.
thank you Sven!
My investment thesis is: Price low, production cut, price high. Invested 2016 in Gazprom and bought last month some more Shares. Bought first Position last month in Royal Dutch Shell. Reading at the Moment about National Fuel Gas (49 raises) and wants to build the first Position. If institiutional Investors will sell all the oil+gas stocks they are ignoring the dependance of the mankind to it. Heard some professionals about greenenergy and they came to the conclusion that we will not cover the next 10 – 20 years the demand of energy by green energy. In my personal opinion Blackrock is doing greenwashing as well.
Theres a huge factor in terms of oil production (and thus prices). The closer we get to the new energy paradigm, the more the oil holders will panic and ramp up production, as their oil might be left almost worthless if not used any more for energy. That could crash the oil market completely. We already see that OPEC is having a hard time agreeing.
Yes, oil-stocks are a very difficult cyclical sector! The sentiment currently is very bad. That's a contrary signal, …maybe ?? I expect higher inflation. Oil runs good with higher inflation. The BEV story is okay, but it will not substitute the rising oil demand. Copper: Also a big story because of the EV metals hype. But what happended with the copper price ?? People and media are often very irrational. .
Thanks Sven, very interesting material and food for thought. If I may make only one constructive critic: Why didn't you speak about oil refiners? MPC, PSX, VLO. They are very interesting companies, and they work well (or should) with low oil prices, or more generally with a high crack spread. Those 3, which are the majors US refiners, have increased dividends like 20% per *year*. They are money printing machines! You should've cover those! 🙂 Ciao!
here is the article: https://sven-carlin-research-platform.teachable.com/courses/335443/lectures/14118510
What do you think about IPCO ruled by Lunin family?
I don't know whether electrification will go as fast as predicted. Cars that replaced horses also raised productivity. Will electric cars do the same or they only suppose to solve far-fetched ecology problems?
Also even if rapid electrification is the case, the world would need more electricity. Solar and wind energy are of little help because of unsustainable output. There are physical limits on the hydro generation and it seems that nuclear power is out of favor since 2011. Moreover fundamentally nuclear generation leaves a little room to adjust power to day/night changes in its consumption. In the end, we have gas, oil, and coal.
So I don't know about tailwinds and headwinds, but imo the farther the discourse from the reality the bigger the opportunity. I think that green energy is bullshit. So I have some Rosneft. I feel like a company that produces a barrel of oil for $3 is a fairly safe choice. Well, if I'm wrong I have Norilsk Nickel as well – it benefits from the ecology craziness a lot.
All oil models are wrong as they model oil as energy. Large portion of oil will go into plastic. We ll get plastic houses, bridges, roads and 1000 of new applications because you can 3d print plastic. You can print any piece on the spot, stronger than metal – carboplastic. So i buy oil on EV fear. EV will even speed up and increase oil demand as plastic has more added value. What do you think guys?
Sven – putting the FUN in FUNdamentals 😉
Buffett didn’t exercise the Occidental Petroleum warrants, Ted Weschler bought the common stock with his own money because he believes the stock is undervalued (which I agree with him on.
Thanks for the video Sven… I currently own 2 Energy stocks and have been looking for a 3rd with little luck. I'll likely go with a Services provider since I'm not a big fan of the drillers. I'm watching CoreLabs (CLB) closely. They're on the small side, but their reservoir analysis business has virtually zero competition. They're far from risk free, but risk/reward is looking better and better as the share price continues to fall. Not buying yet tho'.
BTW… I currently own Enbridge (ENB), which has been in my portfolio for a few years now and have a newer speculative position in Tellurian (TELL). The TELL spec is really a bet on management. I'm hoping they can recreate or possibly even better what they did with Cheniere (LNG) some years back. Multi-bagger potential over the next 5 years if so. Possible 100% loss if not. TBD…
The issue with suggesting that oil stocks are potentially renewable in the future is to remember there core business, the UK stock market classifies oil companies as a non renewable sector for classification this was recent change, to help clarify portfolio allocation for those wishing to avoid, or incorporate, makes sense as it is core business.
Sven please alert us when there is a fund containing Aramco that is purchasable on the NYSE, thanks.
Sven, have you looked into EOG? They have 8.4B in operating cash flow LTM. Let's say they need 2B in capex to maintain their competitive advantage. That's 6.4B in FCF for a company trading at 43B market cap, with the strongest balance sheet in the industry. Their breakeven price is way lower than competitors for Permian Basin shale, like around ~$25 vs $50 for competitors.
Thanks for these vids Sven! Please analyse NMC Health
Thanks for your insights. It was very tempting to put money in oil stocks. Now i will use it to pay of dept and education. As i said thank you.
Hi Sven, I have to disagree with you on that one. XOM and most of these companies have also downstream,midstream operations and own natural gas/lng projects. which means that if oil price goes down then the profit on their downstream will compensate for the loss of their upstream unit. china is a temporary situation while demand is growing big time as all electric cars will need to use natural gas or even coal(depends where you live) in order to charge their batteries. the electric car is no more than a play for politicians to draw votes and budgets using climate friendly policy and as a gadget for companies such as tesla. add to that fact that driving season is over the corner and demand will peak again as russia and saudi arabia budget is relying on oil and gas price, crack spreads will much higher and refiners will take all supply out there again leading to a much higher oil price. I think that if you will make a video that shows the production of barrels per day based on oil price and show the floor price as you did in the past with Silver then investors can understand better their risk.
???I'm not asking you for an advance I am asking you for your opinion: which could be a good mine to buy, in your opinion?
In my opinion LUCRF could be a good one, but I am looking for having different types of mining materials.
One more LIKE 325 because what you say about how they get fired.
🤝🤗🤝
Are you still long Vedanta?
Thoughts on APA:NYSE ?? i hear its a good one to buy
if the central bank bubble pops, wouldnt oil demand go down alot?
RDS. from 2015 to 2019:
Sales +54,18%, EBITA +144%,Retained earnings +27%,OCF +62%,FCF+730%, Dividend +94%,Book value +26%.
It is not seems like a sinking ship.
The oil is in bear market more than 11years. This condition have forced many companies clean their assets, let to the best ones, got rid of debt to be profitable again.
For example, RDS-Ahad 158B retained earnings last year and TOTAL has a break even price around 30$. They have got also 28B in cash, money ready to deploy for instance to solar. If this is not bargain and if this is not a bear market hysteria then I am missing sth. Of course, we should keep our portfolio balanced.
To the point of compounding, if we deploy dividends we will get more income.
Thanks for this article as I know you have "bargain shoppers" (like me) that follow you. I had been in an upstream company (EOG) which is the best of breed shale company since 2014 but finally sold out of that last year with a multiyear loss (was a great trading stock but I wasn't doing that). And finally abandoned KMI last week selling into strength, but still at a loss over 6 years. My renewable plays (TSLA, NEE, TERP) gains have far more than offset the energy losses. I agree the pain is not here yet (I rode out the 2014/15 dumpster fire). No tailwinds here.
16:12 wait for the rait praaisahh… Brate volim te… Samo naprijed…
People…. invest with Sven Carlin and get smarter…
When he says subscribe, then soup skribe… Ok… There are no buts or ifs… just do it… like Nike…
Sven:
thanks for the great insight. An important question: when other countries GDP tanked, will the US dollar stay strong even the Global Economic collapses? as they seek for the higher interest rate of the US bond? What will be the US dollar in the further?
What about Russian oil companies like Gazprom Neft, Surgutneft etc?
One more idea: Isn’t it safer to invest into midstream companies like ENB or EPD? Theoretically they are not so dependent on oil prices as long as oil and gas is needed which likely will be next 50+ years..
Maybe if someone is tempted to invest into the future likely declining business of oil he or she could hedge with investing into renewables at the same time. It may be a mix of utilities, technology and materials, all of them growing long term no matter if oil is here to keep it’s pricing power or not – AQN, EMRAF, NEE/ NEP / BEP, RNW, NILSY/COPX, copper, nickel, manganese, graphite, cobalt mining, ALB/SQM or simply LIT, TAN, TSLA ;-),.. so many possibilities for hedging if the oil thesis is broken!
This is quality thing
coking coal/ metallurgical coal is similarly hated but unquestionably essential
Glad you’re doing aviation next. Oil prices will benefit them, the 737 Max’s returning and eventually the virus concerns going away.
So commodities, what's really interesting is that they are the only things that are technically "cheap" right now. There is clearly a bubble in bonds and equities (stocks) so if those bubbles burst where will the "big money" flow. After all, it has to go somewhere. Well, the only things out there are commodities. What's scary is if I'm right that would push up inflation at a time when we would want central banks to cut interest rates but with high inflation, they would have to raise them.
thank you Sven!
My investment thesis is: Price low, production cut, price high. Invested 2016 in Gazprom and bought last month some more Shares. Bought first Position last month in Royal Dutch Shell. Reading at the Moment about National Fuel Gas (49 raises) and wants to build the first Position. If institiutional Investors will sell all the oil+gas stocks they are ignoring the dependance of the mankind to it. Heard some professionals about greenenergy and they came to the conclusion that we will not cover the next 10 – 20 years the demand of energy by green energy. In my personal opinion Blackrock is doing greenwashing as well.
Theres a huge factor in terms of oil production (and thus prices). The closer we get to the new energy paradigm, the more the oil holders will panic and ramp up production, as their oil might be left almost worthless if not used any more for energy. That could crash the oil market completely. We already see that OPEC is having a hard time agreeing.
Yes, oil-stocks are a very difficult cyclical sector! The sentiment currently is very bad. That's a contrary signal, …maybe ??
I expect higher inflation. Oil runs good with higher inflation.
The BEV story is okay, but it will not substitute the rising oil demand.
Copper: Also a big story because of the EV metals hype. But what happended with the copper price ??
People and media are often very irrational.
.
Thanks Sven, very interesting material and food for thought. If I may make only one constructive critic: Why didn't you speak about oil refiners? MPC, PSX, VLO. They are very interesting companies, and they work well (or should) with low oil prices, or more generally with a high crack spread. Those 3, which are the majors US refiners, have increased dividends like 20% per *year*. They are money printing machines! You should've cover those! 🙂 Ciao!