Barrons / large oil company valuations ............................................................
this was from :
Barrons
May 17, 2024
12 Stocks to Play Growing Energy Demand, From Oil and Gas to Nuclear and Solar
Fossil fuels and clean-energy shares are unloved by investors. That's an opportunity, say our roundtable experts. Why some stocks could double, and then some.
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This commentary was from : Lucas White, a natural-resources and climate-focused portfolio manager at GMO.
<<<<< The fossil fuels industry is unloved by equity investors. A lot of endowments, foundations, and institutional investors have divested from the sector. That means it is unlikely fossil fuel companies will go from being really cheap, as they are right now, to the more normal valuations they had historically. To put some numbers on that, fossil fuel companies are now trading at about a 70% discount to the broad equity market. On average over the past 100 years, they have traded at closer to a 20% discount to the broad equity market.
You could invest in fossil fuel companies thinking that gap is going to shrink. If the discount goes from 70% to 20%, you'll make a lot of money quickly. But I suspect that isn't the most likely path. >>>>>
Jon.
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