Activity Update: Why I Bought Shares of Imperial Oil

Just a brief note to let all of you know that I purchased 140 shares of Imperial Oil (IMO) at $35.115 to get me up to the five position minimum that I utilize in my trading account.

Imperial is the Canadian subsidiary of ExxonMobil (XOM) which owns about 60% of the stock.

The company is traded on the AMEX where it made the list of top % gainers closing at $35.52, up $4.90 or 16% on the day, a few cents higher than my purchase.

Basically, the second quarter results for Imperial were strong, the Morningstar.com looked nice, and the stock is trading at a deep discount to levels it was at earlier this year.

The company has been growing its revenue, increasing its earnings, and raising its dividend regularly while maintaining a relatively stable outstanding number of shares.  Free cash flow is positive and growing and the balance sheet, when we check the ten-year balance sheet from Morningstar.com, appears to be satisfactory.

Certainly, if we look at the "point & figure" chart from StockCharts.com, we can see that the stock is trading well off its highs near $63 earlier this year, and has come down along with all of the oil-related stocks.

click to enlarge

Oil and commodity stocks helped move the market higher today as investors were expecting that the near-term bottom in the price of oil might be near, as this news story reported.

Also driving energy stocks higher was an Oppenheimer upgrade Tuesday morning of a lot of oil-related stocks that helped this sector throughout the day.

As reported:

Oppenheimer upgraded a number of oil and gas companies this morning, saying they expect industry consolidation in the next 12 months.

Now Imperial was not on the list, nor was National Oilwell Varco (NOV) nor Graham (GHM).  But these stocks moved higher 'in sympathy' with the rest of the stocks upgraded and as Paul Harvey would say,'that's the rest of the story!'

When choosing stocks, I am certainly looking for momentum, and oil and financial stocks were up and down the list today.  Maybe I should have purchased some financial shares, but they don't really fit my revenue and earnings momentum and while they may be great value plays, I am not really oriented to those selections and usually have little patience or the stomach for buying stocks as deeply discounted and 'banged up' as these.

In any case, I wanted to get you caught up on my own activity in my trading account.   Good-luck to all of you in this stock market!

Disclosure: The author owns IMO.

Comments

[Captain Thomas:]

Look at HK and Chesapeak, natural gas wil boom because of the partnership of Pelosi and T Boone (see the Pickens energy plan)

2008 Oct 22 09:05 AM

[Wadhamite:]

Imperial Oil is a good company. It is a dominant player in Canada and, as noted, is an affiliate of ExxonMobil. I'm tempted to make a similar purchase; however, since ExxonMobil owns 60 percent, there's no real individual voting power.

2008 Oct 23 05:21 PM

[User 288005:]

Why is IMO listed as not paying any dividend?

2008 Oct 29 10:13 AM