21
4月
2020

US share tips Bargains in the energy sector – MoneyWeek

Thatmeansstocksarelikelytoreboundallthemorestronglywhentheinevitablecoldspelloccurs。

Throwinthefactthatthecaseforoilandgasremainsstrong,thankstolimitedsuppliesandmountingoveralldemand,andsomeenergycompaniesnowlookworthscoopingup。

TheInternationalEnergyAuthorityestimatestheworldwillconsume115。

4millionbarrelsofoilperday(mbbl/day)in2030,comparedwith82。

1mmbbl/dayin2004,saysPaulMaidmentonForbes。

com。

Atthesametime,stocksarelow“andshrinking”,sparecapacityis“atitslowestin30years”,maturefieldsintheUSandNorthSeaare“windingdown”andnewreservesarebeingdiscoveredatarateinsufficienttoreplenishproduction。

Oneenergyfirmwith“decentgrowthprospectsandlowmultiples”isChevron(CVX,$58),saysDimitraDefotisinBarron’s。

Theshares“stalledfollowingitsAugustmergerwithUnocal”andaredownabout13%fromtheir52-weekhigh。

Butattheselevels,thepricedoesn’tfullyreflectthevalueofthecombinedcompanies,accordingtoFrederickSturmoftheIvyGlobalNaturalResourcesfund。

At7。

5timesearningsforthenextfourquarters,thesharesappearcheaprelativetoboththe10%projectedlong-termgrowthrateandthe8。

4timesforwardmultipleatwhichotherintegratedoilandgascompaniesintheSP500trade。

Thestockalsooffersadividendyieldof3。

1%。

Similarly,BurlingtonResources(BR,$69)isoneofthelargestproducersofNorthAmericannaturalgas,yettradesonamultipleofonlyaboutninetimesestimatedearningsforthenextfourquarters。

Thatmakesitappearcheaprelativetoitstypical13timesforwardearningsoverthelastfiveyearsanditsprojectedlong-termearningsgrowthrateof11%。

JubaknotesthatBurlington’sproduction,damagedbyHurricanesRitaandKatrina,issettobouncebacknextyearandgrowby10%。

Arecession-proofhealthcarestock

Americansseemtolikevisitingthedentist。

Theywillspendabout$84bnondentalcarethisyear–ajumpofmorethan100%fromthe1993figure。

Nowthatpeoplearelivinglonger,complexproceduressuchasimplantsarebecomingmorepopular。

Thedental-supplyindustry,whileprofitingfromageingbaby-boomers,issparedthedownwardpricingpressureandregulatoryinterferencethatbedevilsothersub-sectorsofthehealthcareindustry,andhasbeenvirtuallyrecession-proofinthepast,saysFortune’sCoreyHajim。

Thereisalsoamplescopeforconsolidationofthefragmentedindustry。

EnterDentsply(XRAY,$57),theleadingdentalsupplierwith17%ofthemarket。

Aseriesofacquisitionshavehelpeditputoutastreamofnewproducts;lastyearitproducedOraquix,ananaestheticgel。

It’sonahigh2006p/eof19,butSueyWongofRobertBairdthinksitsmoveintohigher-marginfieldsmeansearningsareontheupand,inprice/earningstogrowthterms,it’sonadiscounttothesector。

It’sonStandardPoor’s‘strongbuy’list。

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