Rant About It

Archive for the ‘Energy’ Category

Highest Rated Sectors: Did Analyst Get It Right ?

Posted by rantaboutit on March 13, 2007

What are we looking at here ?
The most popular S&P 1500 groups. The table is self explanatory, so i will just point out few interesting things. The first column is the list of sectors most recommended by the Wall Street Analyst. The sixth column gives the overall percentage of buy recommendation. The last column is the stock that is most favored in that particular sector. As you can see Contruction Materials topped the table with 61.1% buy recommendation. Analyst are most bullish on Vulcan Materials Company VMC.

Construction Material Sector
Vulcan Materials Company VMC is currently trading at $116.01

  • P/E = 24.76 (ranked #2 in the construction materials sector)
  • EPS = 4.69
  • PEG =2.31 (ranked #2)
  • Dividend = 1.50% (ranked #9)
  • Market Capital = $11.02 billion (ranked #2)
  • Analyst recommendation of 1.4/5.0

All in all, pretty impressive record. Add to that their 1-year return was whooping +49.75%. No wonder analyst love it. Construction Raw Materials sector performance ? Last one year returns was +25%. Pretty neat…Analyst got it right.

Consumer Finance Sector
Second best is Consumer Finance according to all the analyst. Highest rated in that group is American Express Company AXP which is priced at $54.75.

  • P/E = 18.29 (ranked #11 in the consumer finance sector)
  • EPS = 2.99
  • PEG =1.28 (ranked #9)
  • Dividend = 1.00% (ranked #14)
  • Market Capital = $65.28 billion (ranked #1)
  • Analyst recommendation of 2.0/5.0

AXP has a huge market capital and ranked #1 in their sector. P/E and PEG all look good. But what matters the most for the investors is returns. Their 1-year return was a lousy +0.96%.
Consumer Finance sector performance ?
Last one year returns was -1.65%. Pretty lousy…Analyst got it wrong.

What did we prove here ? Analyst do not get it right all the time. However at times they do not get the credit they deserve. Predicting stock markets is no easy task, especially with multiple factors affecting the stock movement. I checked out 1-year returns for all the listed sectors in the table above. 8 out of 10 were positive. Noteworthy were Water Utility with +25.94% returns, Aero & Defense with +23.01% and Energy Services with +15.21% returns.

Conclusion: Bashing the analyst for getting is wrong is always one of the favorite things to do for all kinds of investors. You and me need to understand that analyst do not get it right all the time. Obviously they wont. Otherwise they would have made billions and billions of dollars at the stock market. Analyst opinions & recommendations can be a good guide for investors to dig deep into the company stock. But it should not be used as an indicator to trade stocks. That brings us to the million dollar question. Are you going to trust the analysts and buy the stock/sector they are most bullish on ?

Recommended Books:

(Source: TickerSense)

Posted in Construction Material, Consumer Finance, Energy, Health Care, Oil, Sector, Water | Leave a Comment »

What is ExxonMobile Upto

Posted by rantaboutit on March 11, 2007

Last year ExxonMobil (XOM) produced about 4.2 million barrels of oil/day. Is that enough ? Probably not. To add to their existing production volume, ExxonMobil has decided to invest in more than 20 new projects around the world over the next 3 years. This would bring in an additional 1 million barrels of oil/day to its volumes at peak production.

Capital Spending
Capital spending is projected to be around $20 billion/year through the rest of this decade. Isnt this something to worry about ? $20 billion/year for an extra one million barrels a day in production ? So what does Exxon have to say about that ? Probably nothing…Just that Exxon’s volume will keep growing through the end of the decade.

So where does Exxon plan to invest ?
Exxon has an ownership interest in 40 refineries located in 20 countries. 20 new projects the company plans to invest in will be mature markets such as North America, Australia and the North Sea, as well as growth areas like the Middle East, Russia and West Africa.

Venezuela Story
Exxon has decided to turn over the control of a joint project in Venezuela’s oil-rich Orinoco River region to its partner, Petroleos de Venezuela SA, Venezuela’s government-controlled oil company, now that President Hugo Chavez has ordered the nationalization of all foreign-run oil projects. Exxon is also in talks with Libya to get access to the country’s enormous oil fields.

Qatar Story
In another news ExxonMobil and Qatar Petroleum announced they were abandoning their joint gas-to-liquids project that sought to produce clean diesel from natural gas, instead focusing on providing natural gas to Qatar.

Recently Exxon posted the largest annual profit by a U.S. company of $39.5 billion thanks to high energy prices as crude oil topped $78 a barrel in the summer. Stock prices stand at $71.12. The shares have traded in a range of $56.64 to $79 in the past year. However what bothers me is the capital spending.

Rants: Is Exxon a greedy corporation ? I mean they posted the largest annual profit, even though oil prices were down in the 4th quarter. It seems like Exxon would rather squeeze the consumers than take a hit themselves. Is Exxon for you ? With that kind of profit margins the answer is evident. Corporations like Exxon is going to make money year after year, doesnt matter what the oil prices are. Their 30 year chart will support my statement. The best thing to do would be to own Exxon stocks and make some money on their greed. Also the capital spending of $20 billion for the returns is simply outrageous. Is this some early warning for oil depletion ?

Stocks/ETFs to watch: ExxonMobil Corp. (XOM). Competitors: ConocoPhillips (COP), BP plc (BP), Chevron Corp. (CVX), Royal Dutch Shell (RDS.A), Total (TOT). ETFs: SPDR Oil & Gas Exploration & Production ETF (XOP), iShares Dow Jones U.S. Oil & Gas Exploration/Production (IEO) (Source: Seeking Alpha)

Recommended Books:

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Posted in Energy, Middle East, South America | Leave a Comment »

Ethanol after Bush’s speech

Posted by rantaboutit on January 25, 2007

After President Bush’s State of the Union Address speech, the shares of ethanol related stocks are moving higher. Bush is expected to promote fuel efficient vehicles, ethanol and new technologies for alternative energy to reduce the dependence on foreign oil.

The news caused stocks of Ethanol companies to go up. Xethanol Corp. XNL went up 28% in last 3 days where as Pacific Ethanol Inc. PEIX grew by 6.58%. Archer Daniels Midland Co. ADM went up by 2.86%. Also Andersons ANDE and Green Plain Revewable Energy GPRE made modest gains of 1.64% and 1.02% respectively.

Along with Ethanol companies, Solar and other alternative energy stocks will also benefit. Few of them to keep an eye on are

  1. Solar companies are Sunpower Corp. SPWR, Energy Conversion Devices ENER, Evergreen Solar ESLR, First Solar FSLR and MEMC Electronics WFR.
  2. Wind energy companies are American Superconductor AMSC and Zoltek ZOLT
  3. Fuel Cells companies are Ballard Power BLD and FuelCell Energy FCEL
  4. Liquid Coal companies are Syntroleum SYNM and Rentech RTK

You can always buy PowerShares WilderHill Clean Energy Portfolio ETF PBW

Posted in Energy, Ethanol | Leave a Comment »