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If You're Buying Energy Stocks, Ignore These 3 Charts
Presented with little comment, aside to say - seriously!!!
"They are cheap?"
What do the 'smart' equity algos know that credit and commodity professionals do not? At 1051bps, Energy credit risk is now at record highs!!
What is it? 3rd time the charm?
Trade accordingly!
Charts: Bloomberg
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Yeah, a lot of knife catchers out there still.
Must be hard with no fingers left.
It's almost like buying gold...
The last laugh is the only one that matters.
True, but the only thing that matter when you laugh your last laugh is that you've enjoyed a good life.
Gold, (fiat)money, stocks and cars will not compensate much.
+1000
Often just a bloody stump will do.
Paper/digital oil is not the same as physical oil.
Are you suggesting that this market is reflecting true price driscovery? LMFAO!!!!
nothing a couple of refinery fires can't fix. /s
Dirt cheap. We're looking at 40% upward moves in these stocks once QE4 is announced. In the meantime, collect insanely high yields.
if you don't btfd then you are a fucking idiot...
Relax, it's all part of Barry's rekovery.
Ameritrade reports retail piling into energy for YIELD.
Kind of like liking nuclear weapons because of their yield. Of course it'll all be a big surprise when all those energy bonds start defaulting, but Wall St. will of finished their sheep shearing by then....
Yes, I don't doubt it for a second. However, I would wait until you have at least a full year of oil under $50/barrel to see where the cash flows bottom. In a lot of those stocks, I seriously question the sustainability of the dividends. I think a lot of hands are going to get burned badly here.
Even if some of the dividends get slashed 50%, they are still insanely high. Take Shell yielding 8.5% as of today...4.25% in this environment, while owning a QE4 [and war, which is coming soon] sensitive asset? Reward > risk.
Everything has risk. Anything can go lower. Trying to pick a bottom is for fools, and if something is dirt cheap I buy it
Devo - if you like high yields and a strong possibility of capital gains, you should check out oil tankers as well. EURN/FRO/DHT are three of the main ones that own a lot of the VLCCs. If oil contango gets going again, those are the main ones to benefit. NAT/TNK are the main Suezmax owners. I think they will do good as well. This Fall/Winter should see very healthy rates going into 2016 as well.
Buy up energy etf! Drilling is super easy and inexpensive. Much great returns!
I find it cute that ZH likes yellow gold but not black gold. Agenda, anyone? Gold mining stocks have the worst balance sheets in America. Gold itself is still in a huge bear trend, yet so many articles here imply a buy. Yet energy stocks go into a bear market, and they're untouchable, despite huge yields and the fact many have diversifited into NG, etc. Every person on earth needs to buy energy; not everyone needs to buy gold (it's a luxury once you're not living paycheck to paycheck, most of which said paycheck is spent on gas or the goods [food] shipped via gas).
I happen to think it's dirt cheap also.
Yes, buying and storing paper/digital oil will be just about as effective as buying storing paper/digital PMs...
The point is, talking about the "price" of anything in the absence of true price discovery only makes you look like a fucking idiot.
It's actually the opposite. Failing to recognize the paradigm we live in [vs the paradigm we should live in, or the paradigm you want us to live in] makes you a fucking idiot. If you're going to listen to Sprott and fall for the rhetoric that there's a physical and paper price, then I have a 1oz gold coin to sell you for 5k, buddy.
If it is a 1932 or 1927D double eagle in MS65 or better, I will be pleased to it off your hands for that price.
Well, actually there is a paper and a "delivery" price adn it is what facilitates teh frauds that go on day in and day out on WS.
Take it from someone in the oil biz, if you buy a public US Oil Company, you ARE buying worthless paper shit. Look what they have and are doing, ie, issuing tons of secondary shares and debt. They are not drilling profitable shale wells but instead drilling their shareholders - to death! It's the LBO of America at its' finest. Load it up with debt to buy it's own shares or issue divvys to reward teh CEOs with free stock and bonuses.
I agree oil is valuable. But like its' Gold brethren, only if you "hold" it or own it directly!!!! That means direct partcipation in the underlying asset or JV - NOT buying paper securities that will one day soon be worthless, just like paper AN79.
Well for one, loading up on debt could be viewed as wise right now since this is a debters world and they'll pay back in dimes, and secondly, only the worst run companies are doing that. There are cheap oil companies with great balance sheets. I wish some of the better companies would load up on debt because debters will win. You could argue it's better to buy bonds of these strong companies, but not argue to avoid them because they're at lows. It's just a bad argument.
Amen brother. I learned a long time ago that you buy cyclicals when they have no P/E and sell them when they have a low P/E. In my mind, ZH is arguing to buy energy now without realizing it.
"What do the 'smart' equity algos know that credit and commodity professionals do not?"
Depends on the particular stock. Right now despite everything, some companies' downstream components (eg gas stations) are quite profitable.
so are the coffers of local and state governments who collect gasoline taxes...
IMO, this is the real motivation behind all this bullshit.
The refiners have been stealing for a while now.
If we move to exporting crude from just exporting products the refiners are going to get crushed.
I am sure that the other refiners in California right now are thinking XOM for shutting down the Torrance refinery. The price of gasoline in Pasadena is $4.29/gallon according to gasbuddy. Talk about ripping your face off. Gold miners sure can't do that because no one needs gold coins to drive their car, bus, truck, airplane or train............
Refineries....
The crack spreads, IE: finished product price vs underlying crude cost, are still extremely strong.
Price to Book?
The reason for oils decline and the dollars rise is not so simple as what meets the eye.
Think back to the seventies and a deal made at that time.
Then think about most all deals(contracts) made since.
Got it!!
Wasn't Bell Telephone broken up in the 70's?
Yes you did.
Now go help Devo. Just like in "Stripes", those with talent help those without.
Oil good. Paper bad.
What they know is that the Syrian conflict is coming to a head. Assad is out one way or another and the Saudis control ISIS (so they say), or they die... But one way or another who ever dictates in that country will be favorable to the West. Stocks are cheap right now, but in the end, they are going way way up, even if the price tanks in the short run. As the West takes over Syria, that pipeline is coming in and payment for this war.. well the increased energy cost will be passed on no doubt.
Just a thought.
paying off ISIS and controlling ISIS are two completely different animals...if you think the Saudi's control ISIS i hv an oil tanker to sell you real cheap
After Assad then House of Saud.