Q: Would 5I be comfortable buying oil stock at the present time.
Thanks in advance
Rick
Thanks in advance
Rick
5i Research Answer:
While the stock has moved up nicely since last year, we would be comfortable buying energy stocks here, particularly as an economic shock hedge if oil stays 'higher-for-longer' than most expect. ATH is a $4.4B name with no dividend yield, rising margins, and it generates a solid level of free cash flows. It is not cheap at 29X forward earnings, but if we see oil prices stay high, we think that analyst estimates can trend higher, resulting in a potential multiple compression. We would be comfortable buying here, while being mindful of position sizing.