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Gold/Mining/Energy : Strictly: Drilling and oil-field services
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To: kormac who wrote (75782)10/7/2000 7:26:52 PM
From: Tomas  Read Replies (1) of 95453
 
The oil sector is the best refuge from energy shocks
The Globe & Mail, Saturday, October 7
By JEFFREY RUBIN, chief economist and managing director of CIBC World Markets
...
What does one do with all that money taken out of broad equity indexes and fixed-income markets? The one obvious place to invest in an energy shock is, of course, in the energy sector itself.

I figure if I'm going to feel poorer every time I fill up my tank, I might as well own the companies that are taking my money. While the oil and gas index is already up more then 40 per cent since the beginning of the year, valuations show little inkling of just how close we are to a global supply wall.

At $40 crude, the TSE's oil and gas sector should be valued over 11,000, using forward cash flows as a guide. Currently hovering around 8,000that still leaves another 40-per-cent upside. That's an attractive proposition anytime. But it's particularly appealing when the stock market and the bond market look like they will be hard pressed to outperform even cash.

The market is just beginning to sense the enormity of the pending energy crunch. When it does, investor demand for oil and gas stocks is bound to explode.

Full article:
globeandmail.com
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