Investing

is now the time to invest in oil stocks?

  • Last Updated:
  • Oct 19th, 2019 6:45 am
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Deal Addict
Dec 11, 2007
1826 posts
375 upvotes
Markham
My view on investing in commodities is quite simple.

There are only 2 types of commodity related businesses that are investment grade. One is companies that MOVE commodities. This includes pipelines and to a certain extent rails (altho they are technically industrials) like Enbridge, Kinder Morgan, CN, etc. The other is companies that are super diversified, either via vertical integration like Exxon, Suncor, Chevron, or via product type, like BHP.

Everything else is highly speculative. Some people may have a spot in their portfolio for that, but expect to lose your shirt once in a while when the bust cycle inevitably comes around.
Deal Addict
User avatar
May 25, 2008
1392 posts
583 upvotes
Toronto
Cerenity wrote:
Dec 4th, 2014 10:31 am
My view on investing in commodities is quite simple.

There are only 2 types of commodity related businesses that are investment grade. One is companies that MOVE commodities. This includes pipelines and to a certain extent rails (altho they are technically industrials) like Enbridge, Kinder Morgan, CN, etc. The other is companies that are super diversified, either via vertical integration like Exxon, Suncor, Chevron, or via product type, like BHP.

Everything else is highly speculative. Some people may have a spot in their portfolio for that, but expect to lose your shirt once in a while when the bust cycle inevitably comes around.
I believe that if one is in the early investing accumulation stage, you should limit the number of upstream O&G companies in your portfolio. Even the integrateds (upstream + downstream) are not immune to commodity price fluctuations (HSE, SU, etc.). In my personal experience, I've had the most success, by far, with midstreams such as IPL, KEY, ALA, VSN etc. purchased at reasonable valuations and modest/high initial dividend yields.
[OP]
Banned
Nov 24, 2013
110 posts
14 upvotes
Thornhill, ON
I recommend everyone sell your oil stocks. with oil prices this low, companies like COS, canadian natural resources, suncor, etc... can't make a profit and will soon go bankrupt.
Jr. Member
Aug 15, 2013
189 posts
98 upvotes
Westmount
Suncor? Bankrupt? Give me your stuff man I need some.
Member
Sep 29, 2014
286 posts
7 upvotes
Brampton, ON
theredstar wrote:
Dec 8th, 2014 7:53 pm
I recommend everyone sell your oil stocks. with oil prices this low, companies like COS, canadian natural resources, suncor, etc... can't make a profit and will soon go bankrupt.
LOLLL im a newbie at investing but even I know these companies are straight beasts....

so im looking to invest like 5k 10k in oil stocks or should I do it in like a oil mutual fund... what should i invest in? thx
Deal Addict
Sep 5, 2010
2186 posts
296 upvotes
Toronto
flyeaglesfly wrote:
Dec 8th, 2014 8:53 pm
LOLLL im a newbie at investing but even I know these companies are straight beasts....

so im looking to invest like 5k 10k in oil stocks or should I do it in like a oil mutual fund... what should i invest in? thx

Same here I am watching a few energy funds to buy when they go lower. Not trading stocks. Only funds.
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Member
Oct 31, 2014
211 posts
84 upvotes
Edmonton, AB
wait 2 more weeks for tax season to be over

COS is not profitable under $65 oil

SU will still make money! Will never go backrupt....

likes goes for HSE and CNQ . . . WCP is the only mid name i'd think of right now

BTE in another 6 months could have a dividend cut...
LRE should be cutting soon, be under a dollar i'd bet! surge will be the next to cut!!
Member
Nov 8, 2009
364 posts
64 upvotes
SheaButters wrote:
Dec 8th, 2014 10:58 pm
wait 2 more weeks for tax season to be over

COS is not profitable under $65 oil

SU will still make money! Will never go backrupt....

likes goes for HSE and CNQ . . . WCP is the only mid name i'd think of right now

BTE in another 6 months could have a dividend cut...
LRE should be cutting soon, be under a dollar i'd bet! surge will be the next to cut!!
Spoke too soon. BTE just cut their dividend from .24 a month to .10
So glad I got out at a higher price but still a huge loss. From here Baytex will likely hit $10 in the short term and possibly $4-5 at it's lowest. They have 3x debt to cash flow which is extremely high even though their debt is not due for a couple years. However if low oil stays around for a year or more look out...just a warning for those who plan on buying BTE.
Penalty Box
Dec 27, 2013
8003 posts
3949 upvotes
Toronto
flyeaglesfly wrote:
Dec 8th, 2014 8:53 pm
LOLLL im a newbie at investing but even I know these companies are straight beasts....

so im looking to invest like 5k 10k in oil stocks or should I do it in like a oil mutual fund... what should i invest in? thx
right now is not the time to invest in individual stocks. go for etfs or mutual funds (unless you can live with the extreme swings. the etfs will weather the storm a bit better.)

CLO
XEG
XMA
Deal Expert
User avatar
Dec 11, 2005
19036 posts
1494 upvotes
Depends on what you think the future of oil is. IMO it ain't so rosy. Prices are not going up any time soon, and when they do go back up they will never reach previous highs.
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Newbie
Nov 12, 2013
42 posts
9 upvotes
Ontario
Now is not the time to invest in etfs or mutual funds in taxable accounts. Reason being the taxable distributions for year-end, for example XEG has a 7% capital gains distribution due towards the end of December
Penalty Box
Apr 16, 2012
3565 posts
684 upvotes
Greely
Isn't it ironic that just 3 months ago, no way people thought oil would reach this low....now people think no way oil would reach back at previous high levels.
Deal Fanatic
User avatar
Feb 19, 2010
5909 posts
2635 upvotes
brunes wrote:
Dec 9th, 2014 6:32 am
Depends on what you think the future of oil is. IMO it ain't so rosy. Prices are not going up any time soon, and when they do go back up they will never reach previous highs.
Never? That's quite a bold statement.

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