Saturday, January 18, 2014

"A couple of oil stock names to lubricate the gears of your financial wealth machine. Laying out a strategic energy deployment in your diversified portfolio"

Dow Jones Industrial Average 16,437.05 (Down) Week ending 01-10-2014
Dow Jones Industrial Average 16,459.00 (UP ) Week ending 01-17-2014


Good morning fellow amateur retail stock investors. This was an interesting and disturbing week in the stock market with Royal Dutch Shell reporting quarterly earnings down because of the rising cost to the major oil companies to find and deliver oil. The disturbing part was the volatility in stock names such as GE, BAC and ISRG as they reporting earnings. Some stocks that were at the top of the IBD rankings such as Nu Skin Enterprises (NUS) got blown up like stepping on a land mine on a single report from China, dropping from $140.00 down to $79.85 in 3 days. Fear not, you still need to be invested in 2014. 


I would start your energy investment strategy off by purchasing the stock of
Seadrill Ltd. (Symbol SDRL, $40.12). SDRL pays a dividend out of 9.47% for each share held. That equated to $2.67 Billion dollars last quarter to shareholders. The Return on Equity for the company is 36.91% and the PEG ratio is 0.0513. You can't ask for better numbers than that. At some point, that dividend rate will need to be lowered so that they can deploy that capital towards additional ships and rigs, but until then, enjoy the 9.47% dividend.


The Royal Dutch Shell news about the major oil companies' costs rising so much made me think that those companies may find it easier and less expensive to just buy other Oil companies. How about Continental Resources Inc. (Symbol CLR, $108.46) as an example?... America's pride in the US energy renaissance, who only has a current Market Capitalization of 20.15 Billion. Peanuts to a major oil company. And, this is a growth story. Revenue, YOY growth is 70.31%.  The PEG ratio is 0.74 and the Return on Equity is 27.03%.  I love this as a growth stock. Earnings per share for 2014 look like $5.67 per share and for 2015 is projecting at $7.23 per share. The 1 year twelve month trailing gain in the stock is 32.16%. I have current revenue at $3.324 Billion dollars. This should have probably been in my 14 for 2014 instead of Holly Frontier (HFC), an oil refiner out there in the interior USA. Did I mention that I like this stock (CLR)?!



One more for you, in case you just need to sleep at night and need a substitute for those floundering short term bond investments.  BP PLC ADS (Symbol BP, $48.20) is an investment the CFO, (Mark Panetta), of the company I work for likes. He is the best person in the world I know with numbers, so you can feel pretty safe with this one. The stock is still recovering from the big Gulf of Mexico oil spill and that has created the value pricing here on the stock.  Your dividend yield here, that is perfectly safe, is 4.73%.



BP has a Return on Equity of 19.57%.  The PEG Ratio is 0.68. The 1 year trailing twelve month gain in the stock is 9.45%. Add that to your 4.73% dividend and your safe return is 14.18%. Pretty simple. Any questions? The twelve month trailing Revenues for the company is $400.9 Billion dollars. THAT, (emphasis), is a major Oil company.

Below, some of the handy work of the editor, whose creativity and command of the English language help this blog venue immensely. Thank you, Molly Wilson.




Yours Faithfully,

Freewilly





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