07. September 2021 | 10:40 CET
Deutsche Rohstoff, Gazprom, Royal Dutch Shell - Do you really want to miss out? Single-digit P/E ratios and share price gains!
Commodities giant BHP is selling its oil and gas business after more than 60 years. However, other companies are pushing to enter and expand in this sector. How does this fit together? Ultimately, it is strategic decisions - focus, diversification or transformation? The high prices for oil and gas are providing producers with high profits. The medium-term outlook is also good. Growth and a favorable valuation are thus enticing. These are the stocks worth taking a closer look at.
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ISIN: DT.ROHSTOFF AG NA O.N. | DE000A0XYG76 , GAZPROM ADR SP./2 RL 5L 5 | US3682872078 , ROYAL DUTCH SHELL A EO-07 | GB00B03MLX29
"[...] The Oxbow Asset now delivers a substantial free cash flow stream to internally fund our impactful drilling and workover programs. [...]" John Jeffrey, CEO, Saturn Oil + Gas Inc.
DEUTSCHE ROHSTOFF AG - Acquisition in the USA
Increasingly, there is a gap between operating success and share price performance. In the first half of the year, the Group presented impressive figures. Deutsche Rohstoff AG identifies, develops and sells raw material deposits in North America, Australia and Europe. For some time now, the development of oil and gas deposits in the USA has been the main focus of business activities. Consolidated net income increased to EUR 17.5 million in the first six months.
In addition, the Mannheim-based company raised its guidance for the current and next fiscal year due to higher prices and production volumes. Analysts at research firm First Berlin are bullish on the shares and raised the price target to EUR 24. In their opinion, the sharp rise in oil and gas prices is not included in the share price. Therefore, an upside potential for the share of almost 50% is calculated. The Company's current valuation of 84 million can also be regarded as moderate. In addition, the Company has an attractive mining portfolio and a trading portfolio.
However, the oil and gas business is undoubtedly where the action is. The most important US subsidiary Cub Creek Energy recently signed a purchase agreement for around 30,000 net acres (approximately 121 sq km) in the US state of Wyoming. In addition to the land area, the purchase agreement includes interests in 17 producing wells with net daily production of approximately 804 barrels of oil equivalent (BOE). According to the Company, Cub Creek will conduct customary due diligence in a timely manner. The Company expects the transaction to close in October.
"With this acquisition, Cub Creek Energy acquires profitable production and unlocks significant potential for long-term development. Combined with Bright Rock Energy's acreage, we will have nearly 60,000 acres in Wyoming. At today's oil prices, there is additional growth potential for both companies in the coming years," said Dr. Gutschlag, CEO of Deutsche Rohstoff.
The completion of the acquisition will allow the Group to strengthen its footprint in the US and increase productivity and profits. It is only a question of how long the market can ignore the stock with a single-digit P/E ratio and good growth prospects.
GAZPROM PJSC ADR - Share reaches multi-year high
Buoyed by good half-year figures, the shares of the world's largest natural gas producer have not only reached a new annual high in recent days but also marked the highest price in several years. In the first six months of the financial year, the Russians, as a result of increased demand and higher prices, multiplied their net profit compared to a weak period in the previous year.
Sales increased by around half to the equivalent of EUR 49.6 billion. As a result of the above-mentioned base effect, net income rose by a factor of 20 to the equivalent of EUR 11.5 billion. Despite the recent price increase, the share is favorably valued. The 2022 P/E ratio is 4, and the dividend yield is just under 11%. The Group has a market capitalization of EUR 83 billion. In total, analysts believe the share has an upside potential of only 10%. However, it can be assumed that the price targets will be raised shortly, with a delayed reaction to the half-year figures.
ROYAL DUTCH SHELL PLC A - Dividend increase, share buyback program
For many years, the Group has been at the forefront of the industry when it comes to cash flow generation. The recently published half-year figures again impressively underpin this. Adjusted Q2 profit rose to a remarkable USD 5.5 billion. Just one quarter earlier, the profit was USD 3.2 billion. This momentum prompted management to increase the dividend to USD 0.24 from the second quarter. The Group also confirmed its previously formulated progressive dividend policy. This envisages increasing the dividend by 4% annually. In addition, the Group announced its intention to carry out a share buyback program for USD 2 billion, which is to be completed by the end of the year. Analysts believe the shares have a further price potential of just under 30%. The fundamental valuation with a 2022 P/E ratio of 7 and an expected dividend yield of over 4% is roughly in line with the industry average.
At the current price levels of oil and gas, producers are generating high profits. Investments made pay off in a short period. Therefore, all three stocks discussed continue to have good performance opportunities. Gazprom and Royal Dutch are well-known and established players, and the shares have already performed well. One stock that is moving under the radar of many investors is Deutsche Rohstoff. According to analysts, the share has a potential of almost 50%!