Russian Energy Stocks Playing Nicer

The stocks of buy-recommended Gazprom (OGZPY.PK) and hold-rated Lukoil (LUKOY.PK) are “acting better” along with global stock markets. Both have been trading above their 50-day average since early March after having registered steeper than average declines from their 52-week highs. Perhaps reflecting their commodity orientation, Lukoil, the oil company, has been leading Gazprom, the natural gas company.

Lukoil is approaching its 200-day average, which could attract more investor attention if the average is penetrated to the upside. Both stocks have remarkably low McDep Ratios. Yet profits are what the Russian government allows, hence the political risk we often cite. Nonetheless, it is in the Russian national interest, we believe, to have profitable, strong, well-respected global companies. That can’t happen without investors making money on stocks of companies like Gazprom and Lukoil.

Speaking of the commodities, natural gas holds above its weekly low of $6.18 set on March 16 on a six-year average basis. Recent new lows in the near-month quote must be interpreted in the context that prices are low seasonally in the months between winter heating demand and summer air conditioning demand. A more positive trend for oil helps. Devotees of the moving average will anticipate that when the high numbers from just before last fall’s steep price decline drop out of the average in June, the whole chart may look more bullish.

Originally published on April 28, 2009.

Comments

[Living4Divi...:]

Great Article!!

"Yet profits are what the Russian government allows, hence the political risk we often cite. "

You hit the nail on the head !

May 19 01:25 PM