"Crude oil remains deeply oversold on an intermediate-term basis, suggesting a rally sometime in the early fall," says Dennis Slothower.
The editor of Stealth Stocks looks to Petroleo Brasileiro SA (NYSE: PBR) as his latest "stock of the month." Here's his review of the Brazilian firm that is now the world's 8th-largest oil company.
"The founding of Petrobras was authorized in October 1953, with the objective of executing, on behalf of the federal government, the activities of the oil sector in Brazil.
"Over the past five decades or so, the company has become the country's leader in the distribution of oil products, an activity not covered by the government monopoly, and today it is internationally acknowledged as the eighth-largest oil company in the world.
"Leading the sector in the development of one of the most advanced deepwater and ultra-deepwater technologies for oil production, PBR was twice (in 1992 and 2001) awarded the Offshore Technology Company (OTC) prize, the most important award in the sector.
"Since then PBR has doubled its production, which in 2003 exceeded 2 million barrels of oil and natural gas per day.The year 2006 brought many new achievements and surpassed production and export records. Petrobras reached a record production in 2007.
"My technical models tell me that after several months of trending lower, oil stocks are ready to rebound. In researching the oil sector, PBR jumps off the page for several reasons.The current stock price of around $50 per share is a very good value.
"PBR has recently made huge deepwater oil discoveries that have warranted massive investments by national and international oil companies in Brazil.
"Currently it is the eighth-largest oil producer in the world, and I see its potential for rising up the ranks very quickly over the next few years. Proven reserves are 15 billion boe (barrel of oil equivalent), and the company owns 15 refiners with a total capacity of 2.17 million bpd.
"PBR has an enormous future and looks poised to become one of the world's largest oil producers. According to my numbers, PBR should be selling in the $100 range over the next three to five years."
Steven Halpern's TheStockAdvisors.com offers a daily look at the latest market commentary and favorite stock picks and investment ideas from the nation's leading financial newsletter advisors.
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