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Stocks to benefit from cheap oil
Posted on 12/16/14 at 6:31 am
Posted on 12/16/14 at 6:31 am
I think lower priced oil is going to be around for a while. Airlines have already popped on this, so may have missed that boat.
Some are saying consumer stocks will benefit with more disposable income, but there are so many other factors there.
anyone have a stock or industry they feel is going to have a Q4 earnings surprise due to lower fuel costs?
trucking companies
plastics
fertilizer
agriculture
Some are saying consumer stocks will benefit with more disposable income, but there are so many other factors there.
anyone have a stock or industry they feel is going to have a Q4 earnings surprise due to lower fuel costs?
trucking companies
plastics
fertilizer
agriculture
6
Posted on 12/16/14 at 6:40 am to Ole War Skule
FWIW many big companies contract to buy their fuel well ahead of time so that they won't be surprised either way down the road for budget planning purposes.
Most of the stock price changes you're seeing are not due to lower Q4 costs, it's because everyone expects lower costs next year or the year after that since those contracts are being negotiated now.
Most of the stock price changes you're seeing are not due to lower Q4 costs, it's because everyone expects lower costs next year or the year after that since those contracts are being negotiated now.
This post was edited on 12/16/14 at 6:41 am
Posted on 12/16/14 at 8:09 am to foshizzle
quote:
companies contract to buy their fuel well ahead of tim
true...I'm also reading that trucking companies pass on 90% of fuel costs in surcharges which change weekly, so they won't get the big pop some hope for...their biggest expense issue is labor as they can't find drivers and are having to increase salaries...that being said, funds and institutions poured money into them over the last month
I guess consumer disposable may be an industry that gets the most immediate benefit from lower oil/gas prices
Posted on 12/16/14 at 8:11 am to foshizzle
quote:
foshizzle
What banks have been lending the most money to local Oil and Gas guys? Depending on their leverage, it may be a decent short, right?
Posted on 12/16/14 at 8:56 am to Ole War Skule
Most major users of fuel have hedge contracts - so they are locked into a price. These hedges usually occur months or longer in advance. So I would not expect an immediate pop. But, if this persists, as these contracts get renewed, they will be paying less. You will start seeing this in Q1 and Q2 of 2015.
As far as consumer stocks and buying power - I'll relate my own experience. On an average month we'll buy about 100 gallons of gasoline. So with prices having dropped about $1 in recent months, that's about $100 a month that can be spent elsewhere. Not a huge sum. Will people go out to eat more? Buy more clothes? Save it? Pay down debt? Repair a car?
I'm not sure it's going to have a major impact on consumer stocks.
As far as consumer stocks and buying power - I'll relate my own experience. On an average month we'll buy about 100 gallons of gasoline. So with prices having dropped about $1 in recent months, that's about $100 a month that can be spent elsewhere. Not a huge sum. Will people go out to eat more? Buy more clothes? Save it? Pay down debt? Repair a car?
I'm not sure it's going to have a major impact on consumer stocks.
Posted on 12/16/14 at 9:57 am to Ole War Skule
I'm thinking large cap and consumer goods. The lower cost of fuel for consumers will translate into more spending on other goods.
Posted on 12/16/14 at 12:27 pm to Ole War Skule
Oil tankers possibly but it's a risky play. A bad day today in the face of an oil rally but check out FRO or NAT
Posted on 12/16/14 at 10:54 pm to Ole War Skule
I'm interested as well. I have seen the oil drop coming for a while and loaded up on some airlines 6 months ago. There are still several that are really not that expensive. The other industries are a bit cloudier. I bought Fedex. Low oil should/holiday season should be great for them. I actually work for a trucking company and own shares of its parent corporation but I'm surprised it hasn't done better. I get a feel for our companies numbers and cheap oil are clearly great for us but I think some of the other companies owned by the corporation aren't quite there.
Posted on 12/16/14 at 10:55 pm to Ole War Skule
Also I've been looking to add a paint company. Valspar looks good, maybe Sherwin Williams?
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