On Jun 8, 2013, Zacks Investment Research upgraded Chinese
PetroChina Co. Ltd.
) to a Zacks Rank #2 (Buy).
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Why the Upgrade?
PetroChina is the largest integrated oil company in China. The
impressive economic growth in China has significantly increased
the demand for oil, natural gas and chemicals. This growth
momentum presents attractive opportunities for industry players
as it can fulfill the country's fast-growing energy needs. Being
one of the two integrated oil firms in China, PetroChina is
well-positioned to capitalize on these favorable trends.
Moreover, growing automobile ownership in China 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 is likely to act
as an advantage for the company in the long run.
Moreover, we believe that the potentially lucrative growth area
for the company is its natural gas business, which is expected to
witness strong growth 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
greenhouse gases that lead to pollution.
We also like PetroChina's recent natural gas deals in Canada and
Australia. The Chinese behemoth's plans - to form a joint venture
in Canada's Alberta to develop natural gas/condensates assets and
to purchase interests in the proposed Western Australian Browse
liquefied natural gas (LNG) project - will provide it with a
global resource and market base, making the company a leading
international energy player. Additionally, these ventures will
also provide a hedge against the uncertain Chinese product
All these positives are reflected in the company's long-term
expected earnings growth of 17.2%. The Zacks Consensus Estimate
for 2013 has also increased 1.3% to $12.25 per share over the
last 60 days.
Other Stocks to Consider
In addition to PetroChina, there are certain other firms in the
energy sector that are expected to perform even better over the
next one to three months. These include
Ferrellgas Partners LP
Cheniere Energy Partners LP
) - all retaining a Zacks Rank #1 (Strong Buy).