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Sector Analysis: Energy sector

Sector Analysis: Energy sector. Sujan shrestha. What is energy sector?.

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Sector Analysis: Energy sector

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  1. Sector Analysis: Energy sector Sujan shrestha

  2. What is energy sector? • According to Investopedia, Energy sector includes “category of stocks that relate to producing or supplying energy. This sector includes companies involved in the exploration and development of oil or gas reserves, oil and gas drilling, or integrated power firms.”

  3. Energy sector at brief • Performance in the sector is largely affect by the supply and demand for energy. • Sector performs well during times of high oil and gas prices. • Sector will earn less when the value of energy drops. • This sector is fairly volatile and is sensitive to externalities. • Oil hovering around $100 a barrel and improved economic conditions in the U.S., energy stocks appear to be a tremendous bargain.

  4. Sector fact • Total market cap: 420,556.84 million • Weight of top 10 constituents: 68.4 % • Average P/E: 14.34 • Average EPS: $4.04 • Dividend Yield: 2.41% Source: McGraw Hill Financial

  5. Energy Sector vs. S&P 500 One Year Graph: Ten Years Graph: Source: McGraw Hill Financial Source: Fidelity Investments

  6. Energy Sector performance (Source: MSCI USA IMI Energy)

  7. Energy sector in news • OPEC raises oil demand forecast to 91.1 million barrels/day – an increase of 1.14 million barrels/day • Growing emerging economies demanding more energy • Natural gas production has cut power prices and appears to be contributing to the "reshoring" of manufacturing jobs from overseas • Ukraine crisis to affect Russian and European Union energy demand/supply

  8. Energy subsectors (Source: MSCI USA IMI Energy)

  9. Spending in the future Source: KPMG 2013 Energy Outlook

  10. Oil & gas exploration and production • Focus on finding, augmenting, producing and merchandising different types of oil and gas. • Energy fields such as shale, hydraulic fracking, and other alternative source of energies are researched. • High demand for more unexplored locations and search for inexpensive operating venues

  11. SWOT analysis

  12. Stock pitch EOG Resources Inc. (NYSE : EOG) I propose the class to buy 50 shares of EOG Resources Inc. at a current price of $98.98, expending a total of $4949.00

  13. EOG Resources Inc. • Current price: $ 98.98 • Market Cap: 50.79 Billion • Beta: 1.3 • EPS: 4.11 • P/E ratio: 23.12 • 52 week average: 56.03-100.36 • Fortune 500 company situated in Houston, Texas. EOG excels in oil and natural gas exploration and production in the United States with proven reserves in the US, Canada, Trinidad and Tobago, the UK, and China.

  14. EOG vs. s&p 500

  15. EOG in news • EOG’s Q4 earning on February 24th, 2014 posted a net income earning of $548 million from $437 million the year-ago quarter. • EOG announced that the company oil production to grow by 27 percent in 2014. • EOG’s 2-for-1 stock split on March 17th, 2014 • EOG’s Eagle Ford Shale reported a 45% surge in energy production capacity from 2.2 billion barrels to 3.2 billion barrels during 2013

  16. Analyst on eog • 19 out of 27 analysts (JP Morgan, Goldman Sachs, Morgan Stanley, UBS, etc.) put EOG as a ‘Strong Buy’. • According to the Motley Fool, “by 2018, EOG Resources could be the top oil producer in America.” • Jefferies Group propose a $210/share target in 2014 from previous $195/share

  17. QUESTIONS?

  18. Reference • https://www.kpmg.com/US/en/IssuesAndInsights/ArticlesPublications/Documents/energy-industry-2013-outlook-survey.pdf • http://www.msci.com/resources/factsheets/index_fact_sheet/msci-usa-imi-energy-gross.pdf • http://us.spindices.com/indices/equity/sp-500-energy-sector • http://online.wsj.com/news/articles/SB10001424052702304914904579434750618125242 • http://www.reuters.com/article/2014/03/07/ceraweek-bernanke-idUSL1N0M41LW20140307 • http://www3.valueline.com/secure/vlispdf/stk1700/vlispdf/f3101.pdf • http://www.fool.com/investing/general/2013/12/29/the-best-energy-stocks-for-2014.aspx • Google Finance • Yahoo Finance • Valueline

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