China Is the Bull In The Oil Shop ($COP $OXY)
“China is the biggest driver of oil demand and its overall oil appetite does not seem to have suffered so much, as it builds up infrastructure and crude stockpiles,” said Tony Nunan, a Tokyo-based risk manager at Mitsubishi.
China is a great catalyst for oil prices. We believe we are setting up to see triple digit oil again soon, maybe as early as this fall / winter. ConocoPhillips and Occidental Petroleum Corp are two dividend producing stocks that need your attention.
COP reports earnings on July 25th before market open. COP is down almost 2% today. The stock is trading down 7% from its 52 week high and has 13% upside potential based on analysts’ consensus mean price targets.
ConocoPhillips plans to achieve growth by focusing on high margin production. The company plans to reinvest cash flows to achieve organic reserves replacement of over 100%.
The company has many fundamental positives. COP pays a dividend with a yield of 4.80% and a payout ratio of 28.27%. COP has a forward P/E ratio of 9.59. COP is trading for slightly above book value. The company trades for 18 times free cash flow.
The stock has been in a well-defined uptrend since the start of June. The stock is now approximately 2% above the 50 day sma and is near the bottom of the current uptrend channel. I see the recent pullback as a buying opportunity.
OXY reports earnings on July 26th. OXY is down almost 2% today. The stock is trading down 21% from its 52 week high and has 36% upside potential based on analysts’ consensus mean price targets.
The company has many fundamental positives. OXY pays a dividend with a yield of 2.54% and a payout ratio of 22.97%. OXY has a forward P/E ratio of 11.02. OXY is trading for 1.78 times book value. ROE is 18.74% and the net profit margin is 26.02%.
OXY recently named Cynthia Walker as Executive Vice President and CFO effective August 6th. Ms. Walker will assume the position from James Lienert, who has been OXY’s Chief Financial Officer for the past two years.
The stock is up approximately 10% from a recent low of $75 which was tested twice. One positive is the stock is resting 1% above the 50 day sma which should provide significant support. I like the stock here.
Photo Credit: http://www.us-china-edu.com/
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