PetroChina ADR (NYSE: PTR) Okay, I admit it, I love this company! I bought it at $44 and again at $55 per share. You could have bought in at anytime in the last two years and made good money. This is one of my best buys ever and I have been beating this drum promoting it since I have been writing for AOL, so if you never bought in, it was not because you did not have any notice. When I first mentioned PTR about seven months ago it was around $100. Its all time high is $140.49 and it closed last night only pennies less $140.42. That is an annualized return of 70+%. I give Barron's full credit for bringing this company to my attention, and they did so prior to the release of information from Berkshire Hathaway indicating that Warren Buffett purchased $1.3 billion dollars of the company. Give Buffett credit though, he did see it first...again.
I cannot tout PTR as being a bargain based on the P/S of 3.51. There are a lot of people following this company and, the faster it has gone up, the more attention it gets, as it hits new highs every few days. What I can say is there is a chance it will come down in the next few months after an earnings report and some profit-taking, or maybe some relief in the price of oil. When it does I would jump in with both feet. When I first examined this company and its future potential I found a P/E of 9.5, a P/S of just over 1.0 offering a 5.4% yield or there abouts. So in this world where there are no sure things I thought I had found one. You can be absolutely sure that the people of China will use more oil tomorrow than they did yesterday, more this year than last, and that will go on for many decades!
The P/S is not the only thing to change, the P/E is now 12.38 and the dividend is now about 3.6%. Still good, but not what it was. The ROE is 28.18, the ROA is 19.06 , and the ROIC is 23.7 which are all above the P/E and demonstrate management is using company resources effectively. Unlike other huge oil companies searching for places to expand PTR is the largest player in the largest growth market that there will ever be and does not have to worry about anti-trust laws or foreign competition inside China. Foreign oil companies have opportunity in China but overtaking PTR is not one of them
When I started writing this story last week PTR was about 10% less. I thought about pulling the plug and substituting another pick but I decided to leave it in because it was not only a big story last year and this year but I think it will remain a big story for a long time and smart investors will want to look at it. (Read the Company Profile.)
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