Investing

is now the time to invest in oil stocks?

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Member
Aug 13, 2013
218 posts
22 upvotes
Bunkhouse wrote: OPEC knows they'll need to keep prices low over several years to sink the other global players. For it to only last a few months there will be little to no impact and their recent efforts will be for nothing. Once things normalize with low prices and dividends are no longer cut or y/y profile drops aren't as substantial then i'll be looking to jump in.
I agree in part, consensus seems to be that the current price drop is based on the supply side, i.e. US oil production ramping up, oilsands coming on line, OPEC continuing production levels etc. The question to answer before diving in is, what happens when/if the demand side tanks also? economic indicators are in the tank right now, in the event that January earnings season does not bring good news, then what? Do you think more QE will save the day? hasn't so far.
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Sep 20, 2005
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GTA
Bunkhouse wrote: OPEC knows they'll need to keep prices low over several years to sink the other global players. For it to only last a few months there will be little to no impact and their recent efforts will be for nothing. Once things normalize with low prices and dividends are no longer cut or y/y profile drops aren't as substantial then i'll be looking to jump in.
Of the countries in OPEC, only Saudi can tolerate these prices. Some can do at $80, while others need $100/oil. The group arent in consensus, and as oil maintains these level or lower, more political pressure amongst the other OPEC nations to pressure saudi to do something. I believe they didnt do anything this time around was 1) they weren't ready to orchestrate a production cut, and 2) they wanted to see if market could stabilize itself and play a wait and see game.

Next meeting is in June 2015, a lot of time for them to plan and see what happens during what is ramping up to be peak season for oil. I am fully expecting them to make a move in the next meeting if oil remains low.

A few month is too much time for junior oil companies struggling to meet cashflow and covenant.
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Sep 20, 2005
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gwplant wrote: LOL @ waiting until tomorrow...looks like it cost you a few percent.
nah, oil down today. Small bounce back from being oversold yesterday. More opportunities to come.
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Nov 2, 2008
1628 posts
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The Capital
theredstar wrote: I am thinking of investing in oil stocks. But with oil's big drop, i am afraid that big names like suncor, canadian natural resources, canadian oil sands might go bankrupt and my investment worthless....
Never. Wanna know why?

Because companies like Suncor, Imperial all have a large retail side to their business. Oil plummets, sure, they'll drop, but the retail side [the pumps, aka consumer] will more than hold them over. Suncor was up 0.33% today... Imperial was up something like 1$ and change.

I was reading the other day that car sales are up 3% ish, people trading in econoboxes for large suv's and less fuel-friendly cars because gas has been cheaper the last little while.

Now, if you're looking at some penny stocks, well, those are 'risks' indefinitely since 100% of their business is in their direct operations and not spread over other aspects of oil...
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Feb 6, 2012
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Gloucester, Canada
ilusa wrote: I jumped in, last week thinking just this..

Looked like it was 1 week to early..
Same :o
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Sep 6, 2010
1944 posts
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Vancouver
darkmagician wrote: nah, oil down today. Small bounce back from being oversold yesterday. More opportunities to come.
LOL ok if you say so keep on predicting...
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Jan 4, 2009
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gwplant wrote: LOL ok if you say so keep on predicting...
Why should he be any different than the other 80% of posts here. Predictions are free.

But if you actually blindly follow someone's advice here, well...
Sr. Member
Nov 8, 2009
501 posts
231 upvotes
jdu0ng wrote: You're backing this statement by...?
I haven't calculated their numbers but a bunch of financial experts are predicting a cut if oil stays in this range for a long period of time.
http://www.stockchase.com/company/find (Type in Surge Energy)

Doubt it'll be the next to cut but once you see others start cutting, I'm sure others will soon follow.
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Dec 11, 2007
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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.
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May 25, 2008
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Cerenity wrote: 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.
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Nov 24, 2013
110 posts
31 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.
Member
Aug 15, 2013
215 posts
114 upvotes
Westmount
Suncor? Bankrupt? Give me your stuff man I need some.
Member
Sep 29, 2014
286 posts
7 upvotes
Brampton, ON
theredstar wrote: 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
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Sep 5, 2010
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flyeaglesfly wrote: 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
228 posts
92 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!!
Sr. Member
Nov 8, 2009
501 posts
231 upvotes
SheaButters wrote: 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
4007 upvotes
Toronto
flyeaglesfly wrote: 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.)

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