Oil Stocks: Levi Folk Generation Capital on Integrated Oils
Levi Folk, president of Generation Capital, spoke today on Canada's Report on Business TV (RoBTV) about integrated oil companies and why people should consider investing in these oil stocks
Why Integrated?
we think they are good defensive buy in short-term..valuations quite good..lots of cash..they are the best stocks to own defensive play..
Oil Outlook
look at supply-demand fundamentals..oil had corrected alot already..how much oil has to go down hinges on housing market in US..oil inventories 12% above average right now over 5 year period..gas inventories high..but demand has not abated that much over past year..projection strong year or two, not only US but globally..if you look at oil cover/demand cover at 54 days, which is a day below what was last year..also, OPEC's spare capacity quite low..I don't anticipate oil will trade time unless US goes into deep recession affecting global economy
On Possible Windfall Tax
Given that gas prices have already corrected, I don't think there will be a backlash..given correction, consumers will spend a little more, keep economy afloat..yes they are producing tons of cash..Exxon produced $52 billion free cash in 2006
SPECIFIC OIL STOCKS RECOMMENDATIONS
we've put together a portfolio of large cap integrated oil companies, EXXON (NYSE:XOM) being one of them I mentioned..big caps in US and Europe make sense..CHEVRON (NYSE:CVX), CONOCO PHILLIPS (NYSE:COP), BP (NYSE:BP), and SHELL (NYSE:RDS.A NYSE:RDS.B TSE:SHC). So if you put them together into a portfolio of large-cap stocks, what we see is a very impressive yield in terms of cash being returned to shareholders..when we're talking about yield, we're not only talking about dividends, but also share buybacks..Exxon for example has abouit an 8% shareholder yield..increases shareholder value..BP is a bit higher..others in mid-to-high single digits..fact they have so much cash makes them good defensives..so if you have further correction, stock won't be killed like junior oil producer..large caps have proven reserves, best technology to find oil..saw that with CHEVRON..P/E ratio's are quite low..now is good time to buy..
Why Integrated?
we think they are good defensive buy in short-term..valuations quite good..lots of cash..they are the best stocks to own defensive play..
Oil Outlook
look at supply-demand fundamentals..oil had corrected alot already..how much oil has to go down hinges on housing market in US..oil inventories 12% above average right now over 5 year period..gas inventories high..but demand has not abated that much over past year..projection strong year or two, not only US but globally..if you look at oil cover/demand cover at 54 days, which is a day below what was last year..also, OPEC's spare capacity quite low..I don't anticipate oil will trade time unless US goes into deep recession affecting global economy
On Possible Windfall Tax
Given that gas prices have already corrected, I don't think there will be a backlash..given correction, consumers will spend a little more, keep economy afloat..yes they are producing tons of cash..Exxon produced $52 billion free cash in 2006
SPECIFIC OIL STOCKS RECOMMENDATIONS
we've put together a portfolio of large cap integrated oil companies, EXXON (NYSE:XOM) being one of them I mentioned..big caps in US and Europe make sense..CHEVRON (NYSE:CVX), CONOCO PHILLIPS (NYSE:COP), BP (NYSE:BP), and SHELL (NYSE:RDS.A NYSE:RDS.B TSE:SHC). So if you put them together into a portfolio of large-cap stocks, what we see is a very impressive yield in terms of cash being returned to shareholders..when we're talking about yield, we're not only talking about dividends, but also share buybacks..Exxon for example has abouit an 8% shareholder yield..increases shareholder value..BP is a bit higher..others in mid-to-high single digits..fact they have so much cash makes them good defensives..so if you have further correction, stock won't be killed like junior oil producer..large caps have proven reserves, best technology to find oil..saw that with CHEVRON..P/E ratio's are quite low..now is good time to buy..
posted by Spelunca at 4:44 PM
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