PetroChina is Selling at a Deep Discount
When analyzing stocks, my favorite valuation metric is the PEG ratio. This ratio is simply the product of the price the company sells for divided by the company's forward earnings divided by the company's 5 year projected growth rate. Any stock selling under 1 is generally seen as being a good buy. Any stock selling for a PEG of less than 0.5 is considered a steal. When the largest integrated oil and gas company in China sells for 0.38 its time to buy. As stated, PetroChina is China's largest integrated oil and gas company. Furthermore, the company has a virtual monopoly on its domestic market, due to the fact that it is partially state owned, and receives preferential treatment from the Chinese government in various matters for the same reason. According to Morningstar, PetroChina now yields 4.37 percent in terms of its dividend, which is much higher than the industry average of 1.43 percent. Morningstar goes further stating that the company's forward earnings yield (the annual return the company would generate if all of its profits were distributed to shareholders in the form of dividends) is also much greater than other companies in the Oil and Gas industry. In short, this company is a screaming buy for long term investors and should be bought aggressively.
2 comments:
Thanks for the good analysis.
Sorry I accidently flagged your blog, it was early morning and hadn't gotten any coffee, my fingers clicked the wrong link. I couldn't find any way to unflag it.
I dont think it matters though, these algorithms should be good enough to filter out the errant click.
I would appreciate it if you would maitain a simulated portfolio of your recommendations on marketocracy or caps.fool.com. It is also nice to have links to yahoo finance page for every stock you recommend, saves me a symbol lookup for every company you discuss ex Sasol.
I find it amazing that anyone could recommend PTR when its a major target of those divesting from companies funding the genocide in Darfur.
Forget the moral issues involved, this company is going to become radioactive as the divestment movement kicks in and the major holders, like Berkshire and Fidelity, are forced to sell. Talk about a risk premium!
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