Looking for Solid Returns from Big Oil

Many Big Oil companies still have solid fundamentals.

One of the main rules for investing during volatile times is to look for companies with strong fundamentals. This is especially true for an investor like me who isn't overly active and who likes the less-sexy "buy and hold" strategy. The idea is to look for companies with strong underlying value, and then buy more shares when the stock is pulling back a bit. That way when the market (and the company) recovers, you make more money since you were able to buy more shares.

And it's tempting to get into Big Oil right now. After all, what is more fundamentally sound than a company like Exxon Mobil (XOM) that has a proven business model and a penchant for making huge profits? Big Oil stocks have remained relatively stable (though they are down from last fall) throughout, and recent events seem to indicate that they will go up. (Well, maybe not BP -- BP, it's the one Big Oil company that I consider kind of shaky.)

But for the environmentally friendly investor it's hard to justify investing in Big Oil. This is why Statoil (STO) offers such an interesting option. It is an oil company, but it is also trying to work toward carbon neutrality. And it appears to offer good valuation.

In any case, the market could (it probably will have at least another dramatic drop or two) fall further, In which case you could buy even more stocks. But it might not be a bad idea to make a play for some carefully chosen energy stocks now, just in case the market starts moving back up.

Disclosure: I do not invest in any of the stocks listed above. I am considering STO.

Comments

[Jake2:]

Very bland. Really only one name, no numbers. Tell me something I don't know.

2008 Mar 31 11:21 AM

[thumbtackelvis:]

"BP kind of shaky"... Tremendous analytical call. Next tell me that the 5% Dividend is shaky. BP has their hand in all of the available alternative energy options. Go check out their website.

StatoilHydro (I have owned STO and NHY for years before the recent combination) is over 50% state owned. STO is licking their chops as the icecaps melt so that they can get in and drill in the Arctic before the Russkies. Please don't preach carbon neutrality when it comes to Integrated Oils. You are cherry picking information and presenting it as fact.

2008 Mar 31 02:40 PM

[Socialism c...:]

To add to Elvis' BP comments - BP just announced a buyback program which will be active during April. Does this not say that BP is going to be heading higher? BP considers its own shares cheap at the moment...you should too.

Disclosure - I already own some BP.

2008 Mar 31 04:14 PM

[SeekingAlph...:]

I know nothing. As I am a moron. One day when filling up my gas tank at 3.50 a gallon I thought, "Woudn;t it be nice to get some of this money back?" . So I went out last fall and bought, for better or worse,
E TOT CVX COP MRO BP XOM STO PTR PBR


I stuck a 1000.000 into each of them. So far I'm down .02%.
Now when I fill up my tank, I'm still pissed.

2008 Apr 01 02:37 PM

[Miranda:]

I'm sure that BP will get a bump. Unfortunately, what with payouts recently to injured folks, and work on upgrading their technology, I'm not sure how long-lasting it would be. And, for a buy and hold strategy, I'm sure that BP will gain overall over time.

I know that BP talks a big game in alternative energy investment, and it is investing in jatropha, but a lot of it has been for show. And I'm not overly fond of STO. But it does make an interesting option for people who are interested in carbon neutrality and want a slice of the Big Oil pie.

Over time, all the oil companies will likely increase. I simply pointed out (and I'm not an investment professional) that in fundamentals BP seems to have more of a problem than many other Big Oil companies.

2008 Apr 01 02:52 PM

[Diegojames:]

YES on STO; never thought about more drilling in the extreme north ahead of the Russians. STO has a Hydrogen filling station and more planned. A broad play on transitional thinking in oil industry. Also into wind turbines. Invest in the solar spin off ASTI (Ascend Solar Tech) in Colorado, USA. Soon to start manufacturing thin film solar panels.
Diegojames
Porter Ranch, California

2008 Apr 14 06:48 PM