No. of Recommendations: 8
A wise man named Warren point out that oil stocks are largely a proxy for oil prices. If you actually know where the oil prices are going you ought to buy futures.
That’s true , he has said that. But here’s another quote:
We have not distinguished ourselves, at all, in the oil-and-gas field, although we've made a little money. We will not be buying, very often, oil-and-gas stocks. But we probably haven't bought the last one.
And since then (that was in 2015), there have indeed been big investments in Chevron and Occidental, and, not so long ago, Suncor.
And avoiding oil companies might have made more sense in the past than it does now. Oil companies have cut way back on exploration, so the combination of declining production and sustained demand seems to augur well for oil prices. Maybe futures would be a good bet, but oilco stocks like CVX and OXY have the nice feature that they are very profitable already (9% and 7% earnings yields, respectively), mostly paid out in dividends.
dtb
