Peshkov
Investors in global markets are plagued by overwhelming fears of “the most touted impending recession in world history” (shout out to the Grit Newsletter), but oil still has You may be missing out on one of the best opportunities out there. We have other products in stock.
Two investment strategies are moving very positively in 2022, making a terrible investment year for most people a great year for those who find them.
The first is energy stocks, commodities and commodity stocks that have been at the bottom of the investment return list for most of the last 12 years. Investors who spotted this trend at the beginning of 2022 made huge gains in top oil and gas stocks, “saving” an investment year when major indices fell about 22%.
2nd turnaround, and 1 done It went largely unnoticed and was on the non-US index. For the first time in a long time, the Euro and Emerging Markets indices not only keep pace with the U.S. stock market in 2022 (which wouldn’t be difficult, given the tech disaster), but in almost all cases, especially towards the end of the season, the U.S. surpassed This year’s.
stockcharts.com
Again, we are so used to Europe and other EM indices underperforming relative to the S&P that this upturn is largely unnoticed or ignored as part of the ARK sector meltdown. was But like energy and commodities, emerging markets, which have been underperforming in recent years, have posted tremendous gains over the past few years relative to U.S. stocks. The continuation of this upturn in relative market valuations in 2023 could mean that many ‘pent-up’ underperformers in euro and emerging market stocks are beginning to ‘catch up’. The fate of these is certainly up in the air, with several macro themes affecting future performance in both commodities and emerging markets. Such as the weak dollar and the possibility of a Ukrainian-Russian truce.
But for our followers, we face two overwhelming questions. First, what are our prospects for these global trends to come together in 2023? And where can you find outsized value in oil and gas stocks (and other commodity stocks)?
Oil topped $120 in March 2022, while ExxonMobil (XOM) barely hit $90 a share. Oil is currently hovering around $80 a barrel, while Exxon is cheating at $115 a share. It seems to me that one of the two is currently wrong (and I’m strongly biased towards oil being grossly undervalued) – but no matter how you analyze it, Exxon It’s hard to make a convincing judgment that still represents great value. I’m using Exxon to make a case across sectors, and even if we can be confident that 2023 will be another glorious year for commodity stocks, here are some examples of some serious room to do to take advantage of it. I want to find
XOM vs Crude Oil (tradingview.com)
Therefore, to get a better idea of how to capitalize on these two combined trends, we have begun to focus on some of the already depressed valuations represented by emerging market and euro commodity stocks. From a fundamental perspective, there are many very good reasons why the stocks I’m about to propose have underperformed in recent years beyond the relative weakness of their home market indices. Please do not dare to argue why it is a company and therefore a terrible investment.
The first is Petrobras (PBR). This Brazilian oil company is 30% state-owned by him, and from that perspective alone, portfolio selection has always been difficult (think Chevron[CVX]’s experience in Brazil. No, Bolsonaro and Lula’s I don’t think it matters much which one is participating). power). Still, Brazil’s offshore oil prospects are among the most established long-term quality new producing oil resources on the planet. Systemic supply problems have plagued oil, and the common oil company has recently focused on reinvesting capital in share buybacks and dividends, as opposed to his traditional E&P developments. . Unlike Exxon, Petrobras has not continued to rise above his March 2022 high of $16. It’s currently trading below $12 per share.
Next is Vale (VALE), a mining company for copper and other metals. Also from Brazil (and complicit in the government’s mismanagement), he’s one of those copper stocks that are just starting to react to the tentative lows of 2022 and the subsequent rise in copper prices. . Other domestic copper stocks feel the commodity recovery is far from over. Vale is a strategy designed to take advantage of the upturn in the EM market and this rebound in metals prices.
The strength in oil and commodities is now a well-established trend that we believe is far from reaching its trajectory. Combine that with the recent resurgence in EM and euro stocks, and it could lead to picks that could boost returns significantly in 2023. We have no plans to make either Petrobras or his VALE the core holdings of our portfolio, but they both represent interesting ideas. Take advantage of these trends together through 2023.
