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If You Regretted Not Investing More In 2008, Invest In Oil Now

Mar. 03, 2020 10:41 AM ETGTE, OXY, XOM, GTE:CA350 Comments


  • If you regretted not investing more in 2008, there are quality oil companies trading for a lower P/E ratio today that you can invest in.
  • Covid-19 fears have become overblown, especially in terms of market punishments. Even in a worst case scenario markets are undervalued.
  • I recommend investing in the three companies discussed below. Let me know what you think in the comments!
  • I do much more than just articles at The Energy Forum: Members get access to model portfolios, regular updates, a chat room, and more. Get started today »

Stock prices fluctuate on a day-to-day basis. Throughout all of this fluctuation, it's important to remember that what you're buying isn't a piece of paper, it's a share of a company. As a shareholder in a company, you're entitled to an equivalent percentage of its profits, expenses, and more. 2008 was a prime example of how investors can overreact, if you invested in 2008 you'd be sitting on >350% gains.

No industry has been punished more recently than oil companies. These undervalued companies have significant potential to reward shareholders. As we'll see throughout this article, ExxonMobil (NYSE: XOM), Gran Tierra Energy (NYSEARCA: GTE), and Occidental Petroleum (NYSE: OXY) are three companies with the ability to generate significant shareholder rewards if you invest today.

S&P 500 P/E Ratio - Macro Trends

As earnings recovered, but share prices didn't, market P/E ratios hit their lowest in decades at 13 in 2011. Since then, they've almost doubled. If you invest today, you're getting, on average, less than a 4% earnings yield. This is in a market where, in 2019, the S&P 500 had 0.7% YoY earnings growth, forecast at, before COVID-19 slowdowns, 7.8% in 2020.

In an expensive market, it pays to see the opportunities. Buying banking stocks at the bottom of 2008 could have yielded numerous 10-baggers. Even the Vanguard Financial ETF (NYSEARCA: VHT), is up almost 450% since its 2008 lows. The equivalent opportunity today is investing in oil markets.

Oil Market and COVID-19 Scenario

Oil markets are currently getting devastated, that's no secret. A choice Seeking Alpha news piece discussed how energy markets are down 18% YTD. That was yesterday. Today, it's more than 20%. On Monday, it was just over 15%. The downturn shows no sign of slowing down, with futures down over 1% on the previous comments.


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This article was written by

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Analyst’s Disclosure: I am/we are long XOM, GTE, OXY, CCL. 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.

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