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  • Analyzing 8 Large Cap Commodity Stocks With High Dividend Yield

    The following is the list of eight large caps commodity stocks having high dividend yield.

     

    No.

    Ticker

    Company

    Market Cap

    Trailing dividend yield(%)

    P/E

    1

    E

    Eni SpA

    81,008

     

    7.10

    7.49

    2

    KMP

    Kinder Morgan Energy Partners LP

    23,369

     

    6.40

    29.53

    3

    RDS.B

    Royal Dutch Shell plc

    209,632

     

    5.00

    -

    4

    RIG

    Transocean Ltd.

    15,667

     

    3.20

    8.55

    5

    SCCO

    Southern Copper Corp.

    22,767

     

    8.10

    7.81

    6

    SDRL

    Sea Drill Limited

    14,075

     

    10.00

    9.17

    7

    TOT

    Total SA

    115,332

     

    8.20

    6.55

    8

    WPZ

    Williams Partners L.P.

    15,985

     

    5.20

    15.46

     

    My favorite value stock in the above list is Royal Dutch Shell Plc. Royal Dutch Shell is an independent oil and gas company. The Company owns, directly or indirectly, investments in the numerous companies constituting Shell. Shell is engaged worldwide in the principal aspects of the oil and gas industry and also has interests in chemicals and other energy-related businesses. The Company operates in three segments: Upstream, Downstream and Corporate.

     

    RD Shell is well placed to double its operating cash flow in 2012E ($45 bn Est.) versus 2010 ($26.2bn) aided by the delivery of the giant Pearl GTL project in Qatar, adding to Qatargas-4 LNG uplift, and sound project momentum elsewhere. It can post around $50 bn FCF for next several years even if we assume oil remains at current levels. Given its diverse portfolio, solid project execution skills and high FCF and dividend yield, I find RD Shell a very good value buy at current levels.

     

    For other stocks in the above list, here are some of the specifics, including a brief description of their businesses, growth rates (top line and bottom line) and Valuation:

     

    Eni SpA is engaged in the oil and gas exploration and production, gas marketing operations, management of gas infrastructures, power generation, petrochemicals, oil field services and engineering industries. The Company segments include Exploration & Production, Gas & Power, Refining & Marketing, Engineering & Construction, Petrochemicals and other activities. Eni SpA’s EPS forecast for the current year is 5.05 and next year is 5.40. According to the consensus estimates, its top line is expected to grow 5.60% in the current year and 3.10% next year. It is trading at a forward P/E of 7.49. Out of four analysts covering the company, three are positive and have buy recommendations and one has a hold rating.

     

    Kinder Morgan Energy Partners, L.P. is a pipeline transportation and energy storage company in North America. It operates in five business segments: Products Pipelines, Natural Gas Pipelines, CO2, Terminals and Kinder Morgan Canada. KMP’s EPS forecast for the current year is 1.84 and next year is 2.40. According to the consensus estimates, its top line is expected to grow 9.00% in the current year and 13.30% next year. It is trading at a forward P/E of 29.53. Out of 18 analysts covering the company, five are positive and have buy recommendations, one has a sell recommendation and 12 have hold ratings.

     

    Transocean Ltd. is an international provider of offshore contract drilling services for oil and gas wells. The Company operates in two segments: contract drilling services and other operations. Transocean’s EPS forecast for the current year is 3.40 and next year is 5.73. According to the consensus estimates, its top line is expected to decline 1.50% in the current year and grow 14.00 % next year. It is trading at a forward P/E of 8.55. Out of 43 analysts covering the company, 29 are positive and have buy recommendations, one has a sell recommendation and 13 have hold ratings.

     

    Southern Copper Corporation is an integrated copper producer. SCC produces copper, molybdenum, zinc and silver. All of the Company's mining, smelting and refining facilities are located in Peru and in Mexico, and it conducts exploration activities in those countries and Chile. The Company operates in three segments: Peruvian operations, Mexican open-pit operations and Mexican underground mining operations. SCC’s EPS forecast for the current year is 3.00 and next year is 3.45. According to the consensus estimates, its top line is expected to grow 40.20% in the current year and 11.90% next year. It is trading at a forward P/E of 7.81. Out of 16 analysts covering the company, eight are positive and have buy recommendations, one has a sell recommendation and seven have hold ratings.

     

    SeaDrill Limited is a Bermuda-based company active in the oil and gas industry. The Company’s operations are divided into three operating segments: Mobile Units, offering services encompassing drilling, completion and maintenance of offshore wells; Tender Rigs, operating self-erecting tender rigs and semi-submersible tender rigs in Southeast Asia and West Africa, and Well Services, providing services using platform drilling, facility engineering, modular rig, well intervention and oilfield technologies. Sea Drill’s EPS forecast for the current year is 2.83 and next year is 3.29. According to the consensus estimates, its top line is expected to grow 4.10% in the current year and 8.20% next year. It is trading at a forward P/E of 9.17. Out of 14 analysts covering the company, nine are positive and have buy recommendations and five have hold ratings.

     

    TOTAL SA is a France-based integrated international oil and gas company. TOTAL SA’s worldwide operations are conducted through four business segments: Upstream, Downstream, Corporate and Chemicals. TOTAL SA’s EPS forecast for the current year is 7.36 and next year is 7.47. According to the consensus estimates, its top line is expected to grow 26.60% in the current year and decline 0.60% next year. It is trading at a forward P/E of 6.55. Out of six analysts covering the company, four are positive and have buy recommendations, one has a sell recommendation and one has a hold rating.

     

    Williams Partners L.P. is an integrated natural gas company focused on exploration and production, midstream gathering and processing, and interstate natural gas transportation primarily in the Rocky Mountains, Gulf Coast, Pacific Northwest, Eastern Seaboard and the Marcellus Shale in Pennsylvania. William Partners’ EPS forecast for the current year is 3.55 and next year is 3.56. According to the consensus estimates, its top line is expected to grow 21.70% in the current year and 13.90% next year. It is trading at a forward P/E of 15.46. Out of nine analysts covering the company, five are positive and have buy recommendations and four have hold ratings.



    Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.
    Oct 13 1:15 AM | Link | Comment!
  • Japanese Nuclear Plants shutdowns a positive for LNG companies

    Nuclear power accounts for 30% of the Japanese power demand. and current disaster may cause reactor shut downs for several months.

    A few years ago, on July 16, 2007, an earthquake with a magnitude of somewhere between 6.6 and 6.8 struck Japan. Its epicenter was about 16 kilometers north of the Kashiwazaki-Kariwa Nuclear Power Plant (KKNPP). It caused shut down in a number of reactors and lead to a multi-month increase in Japanese LNG demand. Current earthquake is much worse and nuclear reactors affected by it can see longer shutdowns. LNG is likely to make up for the loss of nuclear capacity again.

    Going forward, we expect increased imports of LNG by Japan and a rise in LNG prices. LNG suppliers like Woodside Petroleum (OTCPK:WOPEY), BG Group Plc (OTCQX:BRGYY) and Royal Dutch Shell (RDS.A) are best positioned to benefit this given their spot capacities and strong relationships with Japanese buyers.

    Further, an increase in Japanese LNG consumption can also put an upside pressure on European gas prices. Gazprom (OTCPK:OGZPY) and Statoil (STO) will be the likely beneficiary.

    Lastly, LNG shippers like Golar LNG (GLNG) and Teekay LNG Partners Lp (TGP) could also benefit due to increased utilization and rise in LNG tanker's spot rates.

    Tags: WOPEY, BRGYY, RDS.A, OGZPY, STO, GLNG, TGP
    Mar 15 7:38 AM | Link | Comment!
  • Two sectors likely to get boost from rebuilding efforts after Japanese Earthquake

    Japanese earthquake and the tsunami have caused substantial damage impacting housing and infrastructure in ~ 1300 miles of shoreline. In addition to homes getting destroyed several oil refineries are shut and port closed. Following are the two sectors which may benefit from rebuilding efforts after Japanese Earthquake

    Forest Products: Japanese housing market is one of the world’s largest wooden housing market. It is in cyclically depressed condition and rebuilding efforts after the earthquake can act as a catalyst. Timber and wood product rich names like WY, LPX, PCL, and RYN can benefit directly and indirectly from future shipments of logs, lumber, and structural panels to Asia.

    Engineering & Construction Companies: Although not much direct work is expected to come from Japan given the presence of established local contractors, higher capacity utilization for relevant Asian competitors may help US E&C companies. Around 1/3 of Japanese refinery capacity is now shut. US E&C companies with oil & gas space exposure like FLR, FWLT, JEC. CBI, KBR may get some benefit going forward. Further, the concerns about tsunami impacts on US west coast may also lead to reallocation of stalled funding for coastal waterway protection and FEMA. Tetra Tech, Inc. (TTEK) and Michael Baker Corporation (BKR) are most levered to benefit from it.

    Tags: WY, LPX, PCL, RYN, FLR, FWLT, JEC, CBI, KBR, TTEK, BKR
    Mar 15 7:37 AM | Link | Comment!
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