Is It Time to Buy Oil Stocks?
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Transcript of Is It Time to Buy Oil Stocks?
Is It Time to Buy Oil Stocks?
By www.ProfitableTradingTips.com
http://profitabletradingtips.com/trading-investing/is-it-time-to-buy-oil-stocks
Now that oil prices have bottomed out
is it time to buy oil stocks or are there
still oil companies that are overpriced?
http://profitabletradingtips.com/trading-investing/is-it-time-to-buy-oil-stocks
In general, energy stocks have taken
a beating and are trading at levels
appropriate for current oil prices.
http://profitabletradingtips.com/trading-investing/is-it-time-to-buy-oil-stocks
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Before We Continue…
http://profitabletradingtips.com/trading-investing/is-it-time-to-buy-oil-stocks
The exceptions are a group of
Canada oil
stocks. bloomberg reports the story.
http://profitabletradingtips.com/trading-investing/is-it-time-to-buy-oil-stocks
canadian energy companies are
trading at record valuations, signaling
their shares haven’t caught up to the
reality of crude oil’s continued decline.
http://profitabletradingtips.com/trading-investing/is-it-time-to-buy-oil-stocks
suncor energy inc., canadian natural
resources ltd. and other stocks in the
standard & poor’s/tsx energy sector
index are priced at 65 times expected
earnings
http://profitabletradingtips.com/trading-investing/is-it-time-to-buy-oil-stocks
an all-time high and more than double
the average of u.s. peers, according to
data compiled by bloomberg.
http://profitabletradingtips.com/trading-investing/is-it-time-to-buy-oil-stocks
those valuations sit in contrast to
crude, which touched $42.03 a barrel
for the u.s. benchmark last week, the
lowest since march 2009.
http://profitabletradingtips.com/trading-investing/is-it-time-to-buy-oil-stocks
as surging crude output strains
storage facilities and pushes prices
down in the u.s., canadian producers
are cutting thousands of jobs and
reducing spending to weather the rout.
http://profitabletradingtips.com/trading-investing/is-it-time-to-buy-oil-stocks
high valuations suggest that might not
be enough to help support earnings
which are projected to drop 24 percent
for the group in the second quarter
from the first, according to data
compiled by bloomberg.
http://profitabletradingtips.com/trading-investing/is-it-time-to-buy-oil-stocks
It seems obvious that these stocks are
overpriced, but what do investors in
and traders of these stocks know that
the rest of the market does not?
http://profitabletradingtips.com/trading-investing/is-it-time-to-buy-oil-stocks
The Crack Spread
http://profitabletradingtips.com/trading-investing/is-it-time-to-buy-oil-stocks
Value walk offers an opinion
about undervalued oil stocks.
http://profitabletradingtips.com/trading-investing/is-it-time-to-buy-oil-stocks
even though everything related to oil
sold off, there is one group in the oil
sector that has differentiated itself - oil
refiners.
http://profitabletradingtips.com/trading-investing/is-it-time-to-buy-oil-stocks
that’s because instead of it being an
even match, there is a spread in the
market that is stacking the odds in the
refiners’ favor … and now is the time
to jump in.
http://profitabletradingtips.com/trading-investing/is-it-time-to-buy-oil-stocks
it’s known as the crack spread - the
difference between the price of crude
oil and the refined oil product (like
gasoline).
http://profitabletradingtips.com/trading-investing/is-it-time-to-buy-oil-stocks
this is basically what sets the tone for
oil refiners’ profit margins as they sell
the refined oil for a higher price than
the crude.
http://profitabletradingtips.com/trading-investing/is-it-time-to-buy-oil-stocks
as the price of oil fell, oil refiners fell
right alongside them because the
crack spread tightened.
http://profitabletradingtips.com/trading-investing/is-it-time-to-buy-oil-stocks
but that has started to change
dramatically in march.
http://profitabletradingtips.com/trading-investing/is-it-time-to-buy-oil-stocks
while crude oil has slipped to new 52-
week lows, prices at the pump haven’t
followed suit.
http://profitabletradingtips.com/trading-investing/is-it-time-to-buy-oil-stocks
in fact, the national average for a
gallon of gasoline today sits around
$2.40, compared to an average of just
$2.03 earlier this year. that’s a
significant tailwind for oil refiners.
http://profitabletradingtips.com/trading-investing/is-it-time-to-buy-oil-stocks
It would appear that there are profit
centers in the oil industry that are
pumping out money even while the
overall picture would seem to be
bleak.
http://profitabletradingtips.com/trading-investing/is-it-time-to-buy-oil-stocks
Is it time to buy oil stocks? Maybe the
answer is yes if the company is a
refiner.
http://profitabletradingtips.com/trading-investing/is-it-time-to-buy-oil-stocks
The Long Term
http://profitabletradingtips.com/trading-investing/is-it-time-to-buy-oil-stocks
If you interest lies in investing as well
as trading you may be considering
what bargains to pick up in the energy
sector now that prices are at historic
lows.
http://profitabletradingtips.com/trading-investing/is-it-time-to-buy-oil-stocks
Motley Fool poses an interesting
question about drillers or
pipelines as long term cash cows.
http://profitabletradingtips.com/trading-investing/is-it-time-to-buy-oil-stocks
the energy sector has gone through a
huge amount of turmoil in recent
months, as plunging oil prices have
put some companies in jeopardy of
suffering through a painful period of
losing money.
http://profitabletradingtips.com/trading-investing/is-it-time-to-buy-oil-stocks
drillers have taken the biggest
immediate hit, being the most directly
affected by falling prices.
http://profitabletradingtips.com/trading-investing/is-it-time-to-buy-oil-stocks
but some investors also worry about
the prospects for pipeline companies,
especially if dramatic production cuts
reduce the need to transport energy
products.
http://profitabletradingtips.com/trading-investing/is-it-time-to-buy-oil-stocks
As with all investing and trading
working out the dollars and cents
helps create substantial gains.