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Bendigo-Coins Broker Tells How to Still Succeed in an Oversupplied Economy With These Stocks.

With oil prices at an all-time high, it’s no surprise that buyers are going into overdrive. The broker from Bendigo-coins says that the market has been experiencing a record surge in recent months, and there’s little indication of when things might return to normalcy – if they ever do at all!

Ahead of the OPEC+ agreement on July 26th, many analysts predicted another drop from levels seen before news broke about Saudi Arabia reaching stabilization with production last month. Still, even though we got some relief after their deal was announced, stocks remain elevated due to primarily significant external demand coupled with low output from key producing nations such as Venezuela, which continue economic problems related predominantly hydrocarbons exports which make up 90% of its international income. With inventories, normalized oil prices are expected to remain high for the foreseeable future.

With that in mind, now is a good time for investors looking to buy into oil stocks. To help you out, here are the top oil stocks for 2021:

Royal Dutch Shell plc (NYSE: RDS.A)(NYSE: RDS.B):

Royal Dutch Shell plc is an oil and gas company that manages its assets in more than 70 countries. The firm’s primary business areas are exploration for new hydrocarbon deposits, production of oil through the operation of offshore platforms, developing international petroleum projects either directly or via joint ventures with other companies, marketing crude oil and natural gas both on a worldwide basis as well as transporting it through pipelines to customers around the world. They have operations in all continents except Antarctica.

Royal Dutch Shell plc is among the top oil stocks in terms of market capitalization globally, being number four in the top ten oil stocks for 2021.

The company has a return on equity of 27%. Their most recent quarterly dividend payout was $0.76 per share, which gives the stock a dividend yield of 4.7%. The balance sheet is strong, with long-term debt (total liabilities) equating to 25% of total assets and 35% shareholder’s equity. However, this does not take into account off-balance sheet financing through operating leases which totals US$42 billion (19% of assets). Operating cash flow was US$22,915 million, with a free cash flow of US$18,895 million.

Royal Dutch Shell plc has a potential return on assets of 25%. They have issued a five-year growth plan to invest US$197 billion between 2012 and 2016, mainly in upstream projects (UK/Brazil/Australia) and liquefied natural gas (LNG). The company will continue to divest from downstream refineries/marketing assets as returns remain unfavourable compared to growing oil production. Management believes that the market is oversupplied by approximately 1 million BPD through 2020, which implies that their output will be flat or slightly higher during that time frame.

In terms of valuation to earnings, Royal Dutch Shell plc has a 12.1P/E ratio, and a price to cash flow is 5.4, which is 10% lower than its five-year high of 6.2.

Exxon Mobil Corporation (NYSE: XOM) :

Exxon Mobil Corporation (NYSE: XOM) is an integrated oil and gas company that manages its business through three divisions: exploration and production (upstream), refining and marketing (downstream), and energy (chemical). They see most growth opportunities upstream where they operate in over 40 countries; most of their proved reserves are based in Russia with 28 billion barrels of oil equivalent (BOE). The top ten oil stocks for 2021 also include Exxon Mobil Corporation.

Exxon Mobil Corporation has a return on equity of 17%. They have a US$39 billion shares buyback program in place. Their most recent quarterly dividend payout was US$0.47 per share, which gives the stock a dividend yield of 2%. The balance sheet is strong, with total long-term debt being 28% of total assets and 52% shareholder’s equity. Operating cash flow was US$45,734 million with a free cash flow of US$21,042 million.

Exxon Mobil Corporation has a 12.1P/E ratio and a price to cash flow of 10, which is one point below its five-year high of 11. The balance sheet is strong, with long-term debt (total liabilities) equating to 28% of total assets and 52% shareholder’s equity. However, this does not take into account off-balance sheet financing through operating leases which totals US$21 billion (10% of assets). Operating cash flow was US$45,734 million with a free cash flow of U$21,042 million, while net income was US$44,801 million.

Disclaimer: Our content is intended to be used for informational purposes only. It is very important to do your own research before making any investment based on your own personal circumstances. You should take independent financial advice from a professional in connection with, or independently research and verify, any information that you find on this article and wish to rely upon, whether for the purpose of making an investment decision or otherwise.