Petroleo Brasileiro SA (PBR)

What I Like

With PBR share price currently at $35.90 its shows the company is on an uptrend when valued against the 50-Day Moving Average, which is $30.32.  With a 52-Week High of $77.61 (May 08) and a 52-Week Low $14.73 (Nov 08) the stock has seen the share of volatility that the markets have experienced.  I foresee PBR rapidly expanding.  This is a company waiting to take off and I might have caught another huge break. The company has been granted much as $10 billion by China Development Bank to explore recently discovered deep-water oil reserves. Take into consideration it was only a couple months ago when the Brazilian government loaned the company $30 billion to help with the companies $174 billion investing strategy aimed at finding the Americas’ largest discovery in three decades. While most oil companies are cutting costs PBR is increasing investments by 50%. Something big is soon to happen and when it does make sure to be an investor. help pay for the immense oil and gas discoveries they have found off Brazil’s coast, which could turn Brazil into the world’s major oil exporter pushing out the Middle East. These oil fields are abundant yet deep underwater needing many resources in order to exploit. That is where China’s help will come in. More good news for PBR who signed a separate agreement a couple months ago to sell 60 to 100 thousand barrels of crude oil a day, 5% of total production, to a Chinese Petroleum and Chemical Company known as Sinopec. Another memorandum from China National Petroleum (CNPC) could add another 60,000 barrels a day. Latin America loves this company and governments across the continent are injecting capital in hope that it will succeed. With plans to increase production levels by 10 times the sky is the limit for PBR. The reason that PBR is such a strong play is one it is international/emerging markets which allows it to drill offshore and do whatever it wants something U.S. companies are restricted at doing. Secondly the backing of Latin American governments will provide funding to make sure that it falters. Thirdly if these discoveries are true they will have an abundant amount of crude to supply the world when the Middle East dries up. Daily Volume is above 100,000, which is the threshold in which I set. They have outstanding numbers with a 21.07% return on equity and 10.82% return on assets.

What I Don’t Like

The only thing that could make me not like this stock is the fact that analysts say demand for oil is going down. I do agree with this yet I believe it means more in America. The Chinese are still so reliable on oil and I believe they will be PBR’s main partner.

Overview

Overall PBR is a steal of a stock, I loved it at $24 its an insult at $35. This stock will jump and move fast. Expect mid $50s come end of the year.