Anadarko Petroleum: For those who think oil won't fall to $30 anytime soon

Posted Sep 16th 2009 9:00AM by Joseph Lazzaro
Filed under: Anadarko Petroleum (APC), Stocks to Buy

There are analysts and oil gurus who argue that $30 per barrel oil is possible if the U.S./global economic recoveries stall.

$30 oil? Don't count on it, which is why I'm Reiterating my Buy rating for Anadarko Petroleum Corp. (NYSE: APC), first recommended on May 14, 2009 at a price of $43.55.

Look for APC to post a 2-3% production increase in FY2009, followed by a 4-5% rise in FT2010: institutional investors are looking past this year's likely loss, and toward better quarters in FY2010 - which is a major reason Anadarko'stock is up about 35% since May. The First Call FY2009/FY2010 EPS estimates for APC are a loss of $1.60 to a profit of 85 cents.

Stock Analysis: Anadarko Petroleum is a moderate-risk stock. If you've already purchased the company's shares, hold them. If not, consider buying a 50% position in APC now; then buy another 25% in three months, if U.S. and global economic conditions don't worsen substantially. Under any circumstance, don't buy more than 75% of your APC position before December 2009. Sell/Stop Loss if you were to buy shares in this company: $26.

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Disclosure: Lazzaro has no positions in stocks, but does own shares in two Pimco Bond Funds: PHDAX and PYMAX.

Tags: Anadarko Petroleum, AnadarkoPetroleum, energy stocks, EnergyStocks, oil stocks, OilStocks

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Reader Comments (Page 1 of 1)

9-16-2009 @ 9:19AM

e.krabs said...

I agree. While $30 per barrel is possible, it is extremely unlikely. It's worth remembering that it took a combination of the global recession as well as an unprecedented bubble burst to get us to that level, and $30 was roughly the level where it rebounded.

I realize this is only one factor in the equation, but in no uncertain terms, OPEC will not let that happen again if they can help it. They've already been making substantial adjustments through the supply side to help prop up the price. Their goal is more along the lines of $70 per barrel, and that's where we are right now.