As the situation around Iraq’s oil fields wage, what impact will this have at the pumps…and in your portfolio?
The recent gains of ISIS, a radicalized Sunni Muslim organization that has recently conquered Iraq’s main oil refinery in Baji, Iraq, have sent oil prices skyrocketing. While this is bad for your wallet when you need a fill up at the pump, the price jump is proving to be highly profitable for companies like Exxon Mobil (NYSE:XOM) and Triangle Petroleum (TPLM).
Exxon Mobil is one of the largest oil companies in the world. The price of oil has already risen by 5% and according to David White, a blogger from Seeking Alpha, people are speculating that oil prices may rise by 10% to 20%. In White’s opinion, if oil prices do go up by 20%, that translates into an extra $10.1B in extra revenue of Exxon.
According to TipRanks, a financial accountability website, David White has an 8.7% average return on all stocks and a 61% success rate.
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- XOM 15-Year Financial Data
- The intrinsic value of XOM
- Peter Lynch Chart of XOM
In addition to the spiking oil prices due to the Iraq crisis, Exxon Mobil recently stated that “it plans to start a production of 10 major projects in 2014. This is expected to add new capacity of about 300,000 net Boe/d. 300,000 Boe/d in extra production amounts to an add of about 7.2% for 2014. This by itself should help the stock to go up. 3% is closer to the norm for growth for XOM”. Due to XOM’s new major projects, and due to already spiking oil prices, Exxon Mobil is a BUY according to David White.
Triangle Petroleum (TPLM), another oil company, recently received a BUY rating, as well.
Wunderlich Securities analyst Jason Wangler rates Triangle Petroleum a BUY and raised the price target from $12.00 to $14.00. Wangler noted that “strong revenues from the E&P business and expansions at Rock Pile drove results as revenues approached $100 million and solid EBITDA and cash flow figures (both on a consolidated and stand-alone basis) show the strong asset base of Triangle.”
Jason Wangler has a 19.9% average return on all stocks and a 75% success rate in making recommendations. Wangler has a 25.5% average return on Triangle Petroleum stocks.
Deutsche Bank analyst Ryan Todd recently gave another large oil company, Chevron Corporation (NYSE:CVX), a BUY rating with a price target of $142. Todd maintained that “its strength remains its steady plan and clear identity: organically driven, deep, oil-levered, high-margin project queue, now complimented by possibly the highest quality US onshore position in the industry.” Todd went on to say that Chevron’s offshore business “reduces volatility/lumpiness of growth, and offers a source of potential upside as resource quality and activity levels improve.”
Ryan Todd has a 14.1% average return on all stocks and a 67% success rate in making recommendations. Todd has a 5.1% average return on Chevron Corporation stocks.
One of America’s largest oil companies, ConocoPhillips (NYSE:COP), seems to be another oil company that financial experts are recommending. Oppenheimer analyst, Fadel Gheit rated ConocoPhillips a Buy and raised the price target to $90 from $85. Gheit based his rating “on the convergence of positive investment measures, which should help this stock outperform the majority of stocks that we rate. The company's strengths can be seen in multiple areas, such as its revenue growth, solid stock price performance, attractive valuation levels, good cash flow from operations and growth in earnings per share. Although no company is perfect, currently we do not see any significant weaknesses which are likely to detract from the generally positive outlook”.
Fadel Gheit has a 15.5% average return on all stocks and a 79% success rate in making recommendations. Gheit has a 22.3% average return on ConocoPhillips stocks.
The situation in Iraq might have dire consequences regarding foreign policy, Middle East stability, as well as prices at the pump, but these top ranked analysts see a rainbow with gold at its tail by investing in the right stocks at the right time.