PetroChina Hits 52-Week High on Solid Fundamentals - Analyst Blog


American Depositary Receipts (ADRs) of PetroChina Co Ltd. ( PTR ) scaled a new 52-week high of $129.86 during its trading session on Jul 14, 2014. In fact, the Chinese energy giant has seen its ADR price climb some 20.3% since the beginning of the year.  

Why the Bullishness?

The impressive economic growth in China has significantly increased the demand for oil and chemicals. Being the largest integrated Chinese oil company, PetroChina is well positioned to capitalize on the country's favorable trends.

Another lucrative growth area for PetroChina is its natural gas business, which is likely to see a boom in the coming years as China moves from coal to natural gas. At present, two-thirds of China's electricity is generated by coal-fired power plants, which emit polluting greenhouse gases.

Moreover, strong growth in China's middle class and in automobile ownership is expected to fuel consumption of refined petroleum products. Though PetroChina's downstream operations are primarily located in China's relatively poor Northern regions, this would be an advantage in the long run.

Zacks Rank & Stock Picks

With PetroChina ADRs trading at a 52-week high, any upside from here may be limited. The company's Zacks Rank #3 (Hold) - implying in line performance with the broader U.S. market over the next one to three months - also does not reflect an upside potential.

Meanwhile, one can look at better-ranked players in the energy sector like Magellan Midstream Partners LP ( MMP ), ConocoPhillips ( COP ) and EXCO Resources Inc. ( XCO ). All these stocks sport a Zacks Rank #1 (Strong Buy).

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PETROCHINA ADR (PTR): Free Stock Analysis Report

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EXCO RESOURCES (XCO): Free Stock Analysis Report

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of The NASDAQ OMX Group, Inc.

This article appears in: Investing , Business , Stocks

Referenced Stocks: PTR , COP , MMP , XCO

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