The Big Six vs. Axis of Stupid

By Igor Greenwald • April 24, 2013 • Issue Articles

In this issue:

The global hunt for real yield rolls on unchecked, and as ever with promises of high and secure returns, mind your wallet. But while a double-digit yield implies serious risk of a double-digit loss in this low-yield environment, there are super-secure oil majors out there offering dividend yields of 4, 5 or 6 percent backed by ample and predictable cash flows. We drill into the numbers to find the safest bets.

Just know that the oil price today is propped up by a lot of self-inflicted damage to the output in Iran and Venezuela. If these two US foes ever reverse the policies that have placed them in the economic doghouse, oilfield services demand could boom, but crude prices could be in for a major letdown.

The debate about the fair price of oil continues to percolate, with two energy execs recently bolstering the bullish camp while a key bear stuck to his guns.

Natural gas has fared better than oil of late, and we profile three more promising Marcellus producers, adding one to the portfolio.

Finally, longtime holding Core Labs is a Buy again after scaling record highs. May all your investments prove as fortunate.

Stock Talk

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John Unkles

04/25/13 ‐ 3:30pm ET April 25, 2013 at 3:30pm ET

Newfield Exploration (NFX) has been pummeled. Is it worth looking at now???

Robert Rapier

05/03/13 ‐ 3:17am ET May 3, 2013 at 3:17am ET

John,

NFX looks significantly undervalued to me. As you are probably aware, their first quarter results looked very good. I am a little bewildered as to why their stock has performed so poorly, but it looks to me like a bargain at the current price.

Tony Brunet

04/26/13 ‐ 10:34pm ET April 26, 2013 at 10:34pm ET

Robert – I would appreciate and respect either you or your analysis thoughts on Lukoy with a yield of 5.81% and Fidelity Analysis higherst rating of 10 and STO with a a yield of 4.52% with a collective analysis rating of 9.9 out of 10?

05/02/13 ‐ 9:39pm ET May 2, 2013 at 9:39pm ET

Hi Tony,

I think STO is solid, and was in fact a company I almost covered in last week’s look at the big oil companies. $75 billion market cap, nice dividend yield, and low PE ratio. You could do a lot worse than that.

LUKOY has a lot less debt to assets, and a higher dividend, but has a lower profit margin and is a lot more volatile. That last point would steer me away, as I don’t like highly volatile stocks.

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