Oil either profit or cry about it.
Michael is a member of The Motley Fool Blog Network -- entries represent the personal opinion of the blogger and are not formally edited.
Who doesn't want to profit from the run up in oil futures? Investor demand for oil futures contracts cause the price of crude to rise with a whole lot of money being made there. As investors we can not purchase shares in the top global oil producers because they are held and run by countries. State owned oil companies sit on about 77% of the worlds oil. So let's not debate on what is causing the rise in crude prices instead let's profit from it. Below I've listed three stocks I believe will profit from rising oil prices. Exxon because of its size, Petrobras Argentina SA for those willing to risk for greater reward and Occidental for consistency.
My first choice is Exxon Mobil Corporation (NYSE: XOM) the behemoth with a market capitalization of over $403 billion is not a bad place to start. It has a modest 47 cent a share dividend and with the rise in oil futures doesn't it make sense it should have an increase in profits from the oil it brings to market? Yes it doesn't pump all its own oil for the petroleum products it produces, but what it does is far cheaper than what it must buy on the open market.
The next pick is for those with a little more penchant for risk. It is an oil play taking in South America with a company called Petrobras Argentina SA (NYSE: PZE). It is a small company with 1.32 billion in market capitalization. It is trading at about $13 down from its yearly high of $24 so it has room to move with the rise in oil prices. The company has operations in Argentina, Bolivia, Brazil, Ecuador, Venezuela, Mexico, Bermuda, Spain and Austria.
What I like about my next pick Occidental Petroleum is its ability to maintain a consistent profit margin shown in the graph below. I like the fact that if revenues are increasing or decreasing there are no dramatic spikes up or down with its profit margin. A 46 cent dividend and currently trading about $10 off it's yearly high makes it an interesting play for me.
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