Total: 6% Yield And Cheap After Recent Sell-Off

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 |  About: TOTAL S.A. (TOT), Includes: GZPFY
by: Bret Jensen

The continuing debt crisis in Europe took a vicious toll on the market this week with all the major indexes down more than five percent. Energy stocks had one of their worst weeks in many months as falling oil prices put stocks in the energy arena into a freefall. One stock that has been overly and directly impacted by both falling energy prices and the turmoil in Europe is Total (NYSE:TOT). It has a high dividend and dirt cheap stock price make it a buy at these price levels.

Total S.A., together with its subsidiaries, operates as an integrated oil and gas company worldwide. The company operates through three segments: Upstream, downstream, and chemicals. As of December 31, 2010, it had combined proved reserves of 10,695 Mboe of oil and gas.

Business Description from Yahoo Finance

8 reasons to find great value in Total at $41:

  1. It sells at one of lowest P/E ratios of any major integrated oil company. TOT is selling at 5.5 times this year’s expected EPS.
  2. Total is selling near the bottom of its five year valuation range based on P/E, P/S, P/B and P/CF.
  3. TOT yields a very generous 6.5% and has raised its dividend payout by an average of 11% a year over the last half decade.
  4. Total has a lower than average beta (0.93), is priced at less than half trailing revenues and is selling at near book value.
  5. Total continues to replace reserves at higher rate than production, a key for sustain revenues and earnings in the future.
  6. It signed a long term deal with Gazprom (OTCQX:GZPFY) which should provide it with large natural gas reserves for the next 25 years.
  7. TOT has significant new volume coming on line in Africa in 2011 and 2012.
  8. Total is priced way under analysts’ price targets. S&P has a price target on Total of $73 a share and the median analyst price target on TOT is $66.

Disclosure: I am long TOT.