Are Oil Stocks Still Cheap?

your Daily Profit issue [Daily Profit]( Are Oil Stocks Still Cheap? [By Ian Wyatt] By Ian Wyatt Thursday, May 26, 2022 [Warren Buffett’s Secret Wyoming Energy Project]( It’s a $6.3 trillion opportunity. And two of America’s richest investors – Bill Gates and Warren Buffett – are investing over $2 billion. Get urgent details on this secret project – and the next 7,950% stock market winner. [Go here ASAP for urgent details.]( Energy stocks have crushed every other sector of the stock market. The S&P 500 energy sector is up 54% in 2022 – versus a 17% drop for the S&P 500 (NYSE: SPY). So, you’re probably wondering: “Is it too late to buy energy stocks?” Warren Buffett is BUYING energy stocks – [go here for urgent details on his secret project.]( Nobody wants to be late to the party. So let’s dig in and take a look at what’s happening in the energy patch. The price of crude oil in the U.S. has soared from $75 in January to $114 today – a 52% increase. And the price of natural gas is up nearly 80%. Higher energy prices result in much higher profits for oil and gas companies. That’s because the global market sets the price on these commodities. Companies producing oil and gas are able to maintain much of their fixed costs when producing these commodities. Yet the rising prices mean they’re able to sell their product at a much higher price. That means higher profit margins… and typically higher share prices as well. Let’s take a look at one of the biggest oil stocks as an example… Exxon Mobil (NYSE: XOM). In 2021, Exxon generated revenues of $286 billion. And the company’s earnings per share were $5.39. Let’s take a look at the expectations for today. The consensus estimate on Wall Street calls for: - $421 billion in revenues – a 47% increase - $10.07 EPS – 87% increase Now let’s take a look at the stock price of Exxon… [America’s Energy Transformation:]( [Warren Buffett’s #1 Trade – Click Here]( Looks like the market is pricing in these higher revenues nicely. Now let’s take a look at the valuation of the company… Exxon stock started this year at $61. That means the stock was trading at 11 times earnings. Today the stock is trading at $97 – or 10-times earnings. What does this mean? In spite of seeing the stock price jump – Exxon stock has a slightly lower valuation today than in January. The stock price has soared – yet it’s become a little bit cheaper along the way. The story for energy stocks continues to get better… Just look at the trend in analyst estimates. Back in February, analysts expected that Exxon would report EPS of $6.62 this year. Just 90 days later, they’re expecting EPS will top $10. That’s a huge jump! Exxon stock can be considered a barometer for the energy sector. The same thing is true of other mid- and large-cap energy stocks… Energy stocks are getting CHEAPER – even after seeing huge gains in 2022. And that means select stocks can still be attractive BUYS at these levels [(go here for my #1 trade).]( Of course, there are risks… If the war in Ukraine ends, I’d expect the price of oil and gas will see a meaningful pullback. However, I’d expect that pullback to be temporary. Western countries won’t simply start buying Russian oil again once the war ends. I’d expect that sanctions against Russia could remain intact for several years to punish Putin for his unprovoked aggression and war crimes. Meanwhile, energy companies around the world remain hesitant to aggressively increase production. They are – after all – enjoying the profits after years of operating in the red. Plus, the Biden administration is still dreaming of a clean energy future and the end of all fossil fuels. And that means they are behind the ball on policy decisions that could bring down prices over the long-term like signing new leases for drilling on public land. The reality is that the world has underinvested in new sources of energy for the last decade: - Companies pulled back on their investments due to low prices and poor returns - The U.S. government put up roadblocks for drilling and banned pipelines that would bring oil in from Canada - European governments decided to embrace ESG investments and shun fossil fuels Unfortunately, we’re all now paying the price at the pump and with soaring electricity bills. The world needs new sources of energy – and they need it fast. That’s why Warren Buffett and Bill Gates are launching a [secret project in rural Wyoming.]( In fact, they’re personally investing over $2 billion in this project. And the Department of Energy has promised to put up another $2 billion. Frankly, this project could transform energy production across the United States. Plus, it could spark a new $6 trillion energy revolution. [Go here ASAP for urgent details.]( Yours in Wealth, [Ian Wyatt] Ian Wyatt Full Disclosure: Ian Wyatt owns shares of Exxon Mobil. [Visit DailyProfit.com]( [Take a 7 day break from these emails]( [Unsubscribe from these types of emails]( [Manage your email preferences]( [Wyatt Investment Research] Disclaimer & Important Information [Wyatt Investment Research (“WIR”)]( owns and publishes the website WyattResearch.com, other web sites, and, through its subscription services, various investment newsletters, trade alerts, and other investment-related educational materials. Those publications are informational in nature – WIR is not your financial adviser and does not provide any individualized investment advice to you. 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