Best Near-Term Price Gains Ahead For: Integrated Oil Producer Stocks

Includes: DBO, SPY
by: Peter F. Way, CFA


Market-makers [MMs] hedge big-money-fund portfolio manager trades in these stocks every day, to protect their firm’s capital temporarily put at risk filling large volume trade orders.Market-makers [MMs] hedge big-money-fund portfolio.

That price-change insurance tells just how far the MMs expect those clients, who have the money muscle to make things happen, may push prices – both up and down.

These stocks have histories of daily forecasts, many over 5 years or more, at all levels of market enthusiasm and despair. Today’s forecasts provide expectations for the next few months.

Looking back at prior forecasts with similar upside-to-downside prospects tends to put price volatilities, issue by issue, in perspective.

Looking for better prospects among these stocks than ones you now have? Looking for new entries into this set? Here are Risk~Reward tradeoff comparisons to help you choose.

Are you a wealth-builder?

Near-term price gains are most important to investors who are now either starting out in building a portfolio's wealth and exploring how it may best be done, or investors who have come to realize that plans made years earlier are unlikely to be met at current rates of investment wealth accumulation.

In the earlier case time may seem abundant and less important, but it needs to be seen as a most important accelerant in building financial wealth through investing. In the latter investor's case the need for more rapid capital accumulation these days cannot be accomplished by elevating risk to get higher income yields, it must be done by making better use of the investment of time, with capital gain as the prime objective.

Active investing, where capital is constantly put to work in the best odds-on situations to deliver profit within foreseeable time horizons, is the strategy most likely to produce what is needed, at least risk.

That is because investment risk is not a constant. Price change is the element causing both risk and return opportunity, not "volatility" or "uncertainty".

Where an investment's price is now, compared to where it has been, and most importantly, where it is likely to go next, is the key consideration for wealth-building investors.

Even quality stocks, year after year, have price changes within a year that are multiples of their expected "long-term-trend" growth. That means declines must be happening. Near-term is where those declines occur, and where the price recoveries pleasantly surprise.

In the case of Integrated Oil Producers, in the past two years their stocks have typically declined by as much as 80% and many are now still at less than 40% of their former values. Is the time near for a major recovery? Here is the MM outlook for Powershares DB Oil fund (NYSEARCA:DBO), an ETF of the price of Crude Oil, the principal price factor in major oil producer stocks:

Figure 1

(used with permission)

The reason for you to read on is in the following expectations of market professionals as to what their big-money clients are doing and may do next with the individual stocks.

Major Integrated Oil Producer Stocks

Figure 1

(used with permission)

Each stock is positioned in this map by its intersection of upside price change forecast on the green horizontal scale and the price drawdown exposures (on the red vertical scale) typical after prior forecasts like today's. Any issue above the dotted diagonal has more potential risk than return at its present price.

Since price-change risk is a dynamic, not a constant, in time these exposure relationships will change.

Other useful details from similar prior forecasts

Figure 2


Columns (5) and (6) are the source for Figure 1 coordinates. The (7) metric tells what % of the (2) to (3) range lies below (4). It discriminates among (12) prior forecasts to select the similar sample from which columns (8) to (14) data is provided. (13) compares (5)'s promise to (9)'s prior delivery; (14) compares (5) to (6). (15) is a figure of merit combining the several qualitative measures into an odds-weighted, risk-conditioned number.

The blue rows at bottom of Figure 2 aggregate this set of stocks for comparison with a total population of all stocks and aggregates similarly analyzed this day. SPDR S&P500 ETF (NYSEARCA:SPY) provides an investable market index comparison. The Top-20 stocks aggregate indicates how most-competitive capital-gain investment candidates in the population compare.


None of the stocks in this set provide able competition in the potential near-term capital gain contest. That is principally due to their having been run up in price to at least an "appropriate" value based on fundamentals, while other competitors appear to have more "recovery" potentials, as seen by the big-money funds crowd.

Our mission is to identify high-probability price gains in the next 3-6 months. These scores are impacted by price changes which are likely to make a difference as time progresses, perhaps making otherwise attractive stocks now more appealing later.

Additional disclosure: Peter Way and generations of the Way Family are long-term providers of perspective information (earlier) helping professional and [now] individual investors discriminate between wealth-building opportunities in individual stocks and ETFs. We do not manage money for others outside of the family but do provide pro bono consulting for a limited number of not-for-profit organizations. We firmly believe investors need to maintain skin in their game by actively initiating commitment choices of capital and time investments in their personal portfolios. So our information presents for their guidance what the arguably best-informed professional investors, through their own self-protective hedging actions, believe is most likely to happen to the prices of specific issues in coming weeks and months. Evidences of how such prior forecasts have worked out are routinely provided. Our website, has further information.

Disclosure: I/we have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.

I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.