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European Oil & Gas companies are cheap if...

|Includes:STO, TOTAL S.A. (TOT)

In relation to US Oil & Gas companies the European oil majors are cheap if a recession can be avoided. Based on P/EBITDA(e) it's now the moment to brush up the watchlist and to take advantage of the end of the bear market.

I expect the end of the market correction/ bear market when the trading volumes pick up and the indices rise. Catalysts for that could be better news from the credit market in the USA, Europe and China. Then transportations and financials should lead together with energy stocks, because material stocks have already started to pick up.

price-to-EBITDA-ratios
Company P/EBITDA(2011e)
Statoil 1.62
OMV 2.10
Royal Dutch Shell 2.17
Total 2.42
Repsol 2.73
ENI 2.85
DNO International 3.17
Chevron 4.04
Exxon Mobil 6.43
Click to enlarge
Click to enlarge

Galp Energias SGPS S.A. are trading at 10.7-times 2012 Ebitda and BP is very hard to value after the Macondo disaster. Therefore I did not include these stocks in the above table that cover the low hanging juicy fruits.

The P/EBITDA-ratios are calculated using the JCF Consensus estimates and should only be the starting point of your sector research.

Disclosure: I am long TOT and waiting to initiate positions in STO. I am not a registered investment advisor in the USA and do not provide specific investment advice. The information contained herein is for informational purposes only.




Disclosure: I am long TOT, BP.
Stocks: TOT, STO