Best Oil ETF’s & Best Oil Stocks

By: ispeculatornew
Date posted: 05.26.2010 (4:17 am) | Write a Comment  (5 Comments)

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Trading crude oil has certainly been entertaining in the past decade or so and this year has not been different. Wild unpredictable swings, tons of volume, volatility, global economic uncertainty and unpredictable elements almost every single day… they all come together to form the trader’s dream. Even though oil has generally been down so far this year (see the graph just below), there have been numerous opportunities to make money off of the black gold.

And as tragic as the recent BP oil spill has been, it has provided some trading opportunities. It is unclear how damaged BP will come out of this public and ecological disaster. BP has lost 20% more this year than most of its big peers. Is that too much? Its difficult to say of course with the penalties still very much undetermined. But there are possibilities.

Another possible trade is the strong hurricane possibility. The hurricane season is now a few weeks away and the could very much be what is needed to take oil back over 100$.

Historically, crude oil has always been very volatile but had started to seriously take off in the past few years as demand from China, other emerging markets as well as a lot of speculative flows made their way into the crude oil market. It’s unclear how much of it was justified but it’s safe to say that probably none of us expect oil to return to 40$ in the near future. Oil continues to be cheap because of the deep world recession but just look at this graph from Wtrg.com and you will remember exactly how high oil had gone before the economy tumbled:

So let’s start off with a general chart of the price of Crude Oil, in 2010:

As you can see, Crude Oil is clearly down and certainly the trend is towards more losses… The question of course is for how long it can keep up.  Let’s start off by looking at the Top Oil ETF’s and how they are doing so far in 2010:

TickerNamePricePE RatioPE Next YearReturn YTDSales GrowthBook ValueBetaRevenue/ShareSales 5Y Avg GrowthEPS 5Y Avg Growth
PYPLPayPal Holdings Inc36.8336.0821.082.4315.2411.24N/A7.57N/AN/A
RAXRackspace Hosting Inc19.822.5421.36-18.0916.917.791.1612.6420.8330.89

Not a huge surprise to see that short ETF’s have been at the top, especially considering the rapid decline since the start of May

Next up, we will take a look at the large caps which right now in the world of oil reminds us of how painful things have been for BP. Just take a look at this year’s chart for the British company:

And now here are the Top large cap oil companies, as you can see while BP has taken quite a hit, it’s not the worst so far in terms of returns, surprisingly:

TickerNamePricePE RatioPE Next YearReturn YTDSales GrowthAnalyst ratingBook ValueBetaRevenue/ShareSales 5Y Avg GrowthEPS 5Y Avg Growth
PCLNPriceline Group Inc/The1069.121.615.54-17.7124.274.34169.931.13161.4125.9741.93
EXPEExpedia Inc99.933.9717.52-22.5320.84.1118.81.1244.7114.6114.5

As you know, in the commodities world, the largest companies are rarely the Top performers, so here are the top ones so far this year among the top 500 Oil companies:

TickerNamePricePE RatioPE Next YearReturn YTDSales GrowthBook ValueBetaRevenue/ShareSales 5Y Avg Growth
YELPYelp Inc15.23N/A19.35-46.6745.69.191.157.3659.08
FBFacebook Inc101.9178.9124.54-3.543.8215.540.986.451.72

And finally, just in case you are serious, the worst performers.. this might help BP feel a little better…

TickerNamePricePE RatioPE Next YearReturn YTDSales GrowthBook ValueBetaRevenue/ShareSales 5Y Avg GrowthEPS 5Y Avg Growth
AAPLApple Inc93.999.999.34-10.527.8623.131.1240.6225.5634.76
EBAYeBay Inc22.4910.7810.74-19.65-2.255.550.957.113.6536.71

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5 Comments

  1. Comment by John — May 27, 2010 @ 1:05 pm

    OK BP had lost more than 20%. But a federal law may limit how much BP has to pay for damages such as economic suffering in the oil spill… And the law had set a $75 million limit! That’s ridiculous! Millions gallons has spilled into the Gulf since the April 20!?!? There have been rumours on retrospective legislation…

    I see your point. The true impact of this disaster is unclear. Will we ever know the true impact of BP’s oil spill? Will we ever know how many birds/sea creatures we kill with this? How much will BP really pay to victims? For the moment, I dislike BP management’s finger-pointing and excuses…

  2. Comment by IS — May 28, 2010 @ 3:04 am

    @John – Yeah, no doubt that BP is not in a good situation although that improved slightly yesterday as the “Kill Top” operation seemed to have worked for now with the oil leakage having stopped for now… But I would not want to work for BP right now. Do you think the limit should be unlimited (what some are suggesting)?

  3. Comment by John — May 28, 2010 @ 7:05 am

    good question and difficult answer 😉 I think that the law should limit liability to a point that it doesn’t remove all motivation for people to “prevent from oil spill” and to “operate oil companies”… for the moment 75 millions is nothing.

  4. Comment by IS — May 28, 2010 @ 4:57 pm

    @John – I mostly agree with you but the main problem is that raising the limits will make it very difficult for smaller companies to operate leaving only the huge ones which can afford to pay huge fines. I still agree with you but it’s not as obvious…

  5. […] classes. But thanks to ETF’s, it is now much easier for these investors to go long on gold, oil or gain exposure to corporate or government […]

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