Total S. A. Oil & Gas Drilling

These Two Stocks Totally Beat Earnings ($TOT $HP)

The recent pull back in oil prices has many investors questioning what stocks to hold or sell but the same pull back has presented a keen opportunity to buy these stocks at a discount while oil prices start to heat back up. 

Total S. A. should be a core part of any portfolio. 

Key highlights from earnings report:

  • European refining margins more than doubled to $38.20 a metric ton in the second quarter, up from $16.30 a ton in the same period a year ago, and $20.90 a ton in the first quarter of this year.
  • The company raised its quarterly dividend for the first time since 2008, up 3.5% to 0.59 euros per share.
  • The company’s CFO also said mgmt prefers dividend increases versus stock repurchases (refreshing).
  • Total said it remained confident about the second half of the year.

Four additional reasons Total is a solid pick for value and income investors at $46 a share:

  1. The stock is selling at the bottom of its five year valuation range based on P/E, P/B, P/CF and P/S.
  2. With the payout increase, Total now yields close to 6% and the company seems committed to raise payouts as warranted in the future.
  3. The stock is cheap especially for a high yielder. TOT is selling for less than 7 times forward earnings and just over 4 times operating cash flow.
  4. Analysts have a median price target of $58 on the shares. S&P has a “Buy” rating and a $61 price target on the stock.

Like its peers Helmerich & Payne has reported much better then expected earnings. 

Key highlights from earnings report:

  • EPS came in at $1.37 per share, easily beating estimates of $1.16 a share.
  • Revenue also rose 27 percent to $819.8 million, topping estimates of $780.4 million.
  • The company said lower rig expenses and an increase in drilling activity boosted margins at its U.S. land operations (86% of total revenues) in the third quarter.

Five reasons HP is a solid value at $46 a share:

  1. The stock is selling near the bottom of its five year valuation based on P/E, P/B, P/CF and P/S.
  2. Analysts expect over 20% revenue growth in FY2012 and near 10% growth in FY2013. The stock sports a five year projected PEG of under 1 (.71).
  3. The company doubled operating cash flow from FY2010 to FY2011, and the stock is selling for 5 times operating cash flow.
  4. HP has lost about a fifth of its value so far this year, compared with a less than 2 percent fall in the wider U.S. Dow Jones Oil equipment services index.
  5. The company has newer rigs and higher utilization (over 90%) than its peers. S&P has a “Buy” rating and a $69 a share price target on the stock.

Excerpts taken from:

http://seekingalpha.com/article/756701-the-outlook-brightens-for-total

http://seekingalpha.com/article/756171-another-cheap-driller-easily-beats-earnings-estimates-and-is-ready-to-move-higher

Photo source:

http://www.cleveland.com/shalegas/index.ssf/2012/01/chesapeake_energy_corp_creates.html

This is not an offer to buy or sell securities. Oil investment carries with it very high risks. The information contained within this site has not been nor will it be verified by Envestor First and is subject to change at any time. We are not a United States Securities Dealer or Broker or United States Investment Adviser. Do your own due diligence and consult with a licensed professional before making any investment decisions. Please read our full disclaimer before making any decisions.

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