Posted: 4/27/2006 9:03:59 AM EDT
|
For a long term investment, what do you guys think about oil stocks? Obviously these guys are going to have a hand in whatever the "next" big source of energy is, and it won't be a clean switch - oil will probably still be used for decades. Do you think it's a good time to start putting some money into them, or are they overvlaued right now, with news like XOM's record earnings? And which oil stock to buy? I'd imagine Exxon-Mobil is valued higher than say Conoco-Phillips or BP (can you even buy BP stock in the US?), and there are probably lots of smaller players I don't know about. |
|
+1 on that. I think you missed the big investment oppurtunity in that sector. Remember oil was $10 a barrel back in the 90's. I'm sure you could still make "some" money. With the high price of gasoline, I really believe that the gov't will that getting involved, possibly even REGULATING the industry, which will kill stock prices of all companies. My opinion, if you really want to get involved in oil, buy the commodity. Might sound kinda odd, but I think that oil will go up, but not necessarily the companies. There is a very very good chance Liberals will take both houses, if so I can easily see them attemping to regulate the industry to drive prices down, whether that will work or not who knows, but oil companies could be a very risky investment *to open a commodity account you must have net worth of 500k (not including a home) and have at minimum 100k to invest (it may have changed, but that is what I recall) |
If you don't want a futures contract there is an oil ETF "USO" |
|
I think the money to be made is in the service stocks. The drillers, the suppliers of drilling equipment, jack up rigs, etc none of that will be affected when the liberals try to repeal the laws of supply and demand. I also think refiners are going to be there, their margins continue to grow. Just my thoughts. The majors have had their big run I think. |
|
A way to get a piece of the action in terms of both Big Oil ™ and drillers would be to buy a fund that invests in both. Vanguard has an ETF that does this and there are other energy sector funds that can accomplish this diversification goal. If I was to go with an oil stock it'd be XOM (ExxonMobile)...but I didn't...I bought shares of Vanguard's Energy ETF. My goal isn't necessarily to "make money" (defined by me as substantial net profit) with this investment. Rather, it's somewhat of a hedge against the effect of the higher energy prices on my net worth. While higher energy prices are having a negative effect on my net worth, investments in energy are helping my net worth. At least that's the idea in a nutshell. Somewhat more of a "net worth insurance policy" than looking for the mother lode. |
|
Also consider oil service companies like SLB (Schlumberger) and HAL (Whisper...<Halliburton>) and drillers like NBR (Nabors) They clean the innards of the actual wells, manipulate the reservoir, bomb the well pipe to open them to oil flow. They are essential companies and their stock price tracks the price of oil quite closely. |
If that's the case you should look at low-cost options or futures that give greater leverage than stocks, which leverage at most 2:1. |
There are also small speculative stocks you should take a look at. Like Pacific Ethanol. www.pacificethanol.net/ HIGHLY SPECULATIVE |
|
interesting article that came up today thought it was relevant. when everyone is going one way, it's time to go the other. why energy prices have peaked (short) |
agree with this with one exception, where it may not be too late to get involved... historically, NG has traded at ~1/6 the cost of oil. right now, it is trading at ~1/12 the cost of oil. this can't last, one or the other has to move. oil *may* come down a bit, but just as likely NG will come up significantly. and, NG is a seasonal play, with the good buying season coming up (may/june/july). then you hold for 9 months, through next feb or so. and then sell. please use extreme DD before investing in cyclical energy plays. the long term trend is up, but political issues and the odd warm winter can muck things up pretty badly. stockcharts.com/gallery/?$NATGAS%22 financial disclaimer: i hold a very modest position in FSNGX. ar-jedi |
|
Hess (AHC) is doing a 3-1 split soon. I sold about 1/2 of my holdings in it not too long ago. (oh well, had to take my profits sometime). But it's still a good company with a large modern refinery that can handle heavy, sour crude and some proven reserves. Costs them somewhere around $16-$18 to bring a barrel of crude to market, IIRC. ETA, they just changed the ticker to HES. |
One thing I learned while researching ethanol was that these plants use *vast* amounts of water, 180 million gallons per year is the average figure quoted. It lends me to believe that a west coast venture might have a hard time making a go of it. I'm looking at a few of them that are locating in the great lakes region. |