Now when financial instability is dominating the world and gold is down to $1210 per pounce form its all-time high ($1918 per ounce), Forex analysts are still arguing over currency exchange rates for EUR, USD, RUR, CNY, GBP, JPY and other major currencies in 2014. While households are struggling to secure their savings and preserve their jobs, more and more investors are getting risk-averse in an effort to save their investment capital form uncertainty and volatility dominating today's financial markets. They are looking for safe-have assets to survive the hard times we are seeing these days.
Indeed, very few analysts dare make clear predictions for Forex, metals, stocks, indices nd commodities. Still, Alpari, a major international broking company, has been employing the industry's best for years! As a result, the company has a strong team of trading and investing experts.
As you probably remember, in November's Alpari's analytic team called aluminum futures and Alcoa's stock some of the strongest investments at this point. Market Leader wrote about it. A couple of days ago, they named another promising asset to invest in amid uncertainty. This is Devon Energy's stock.
Why is this asset so promising in their opinion? Let's listen to the experts…
Devon Energy's Stock
When in mid 2008 the price of Brent oil hit the all-time high at $147,5 per barrel, oil companies started implementing costly oil projects, the experts say. Well, to tell you the truth, most analyst expected a major retracement at that time. Some of the named $95 per barrel (38,2%). However, none of them obviously expected such a major collapse – 75.46% in 6 months!
On December 24th, 2008, the price hit the bottom at $36,20 per barrel and then started recovering.
When the financial crisis broke out and oil prices collapsed, economic and financial conditions worldwide definitely worsened. Apparently, this resulted in much lower investments in the global oil-and-gas industry. Apparently, oil companies found themselves neck deep in debt and would suffer major losses form higher expenses and debt servicing. Eventually, most oil companies got their stocks depreciated by 60-70%!!!
Later on, the shale revolution enliven the industry a little. As for Devon Energy, it started massive industrial production of shale gas in the early 2000s. Thanks to the production boost seen in 2009, the USA became the global leader in terms of natural gas production. The average US production volume of LNG (liquified natural gas) has already reached 12 million barrels this year. The market is currently oversupplied. The US prices on NG are below the production cost of shale gas. Low prices resulted in transportation and motor companies turning to cheap fuels and NG engines, thereby expanding the chain of natural-gas stations across the country.
Apparently, the US oil-and-gas industry is a promising sector for investors worldwide. The amount of mergers and takeovers has grown drastically. American oil-and-gas companies have failed to reorient their businesses towards shale production and are now being taken over by other energy giants. Low prices forced leading gas companies to reduce the production of natural gas in order to support the prices. On November 29th, the price of natural gas hit the 5-month high at $3,96.
The Independent Oil and Gas industry counts 113 companies with various market capitalization. Apparently, Devon Energy Corporation looks promising in terms of investment. This is a major energy company form the USA. Since the beginning of 2013, its stock has already ginned 16,12%. Fo comparison sake, S&P500 is up by 26,71%.
At the same time, the company announced its decision to purchase a certain share of Eagle Ford (Texas) owned by GeoSouthern Energy. The deal is currently estimated at $6bn.
According to the experts working for Alpari, the deal will help Devon Energy to accomplish the following goals:
· To get the best part of the promising oil field.
· To boost tis oil production by 25% within a few years, thereby hitting the record of 140K berrels a day.
· To improve its strong North-American portfolio.
· To improve all of its financial figures.
Devon Energy’s market capitalization is $23.45bn. P/E is 7.70. The proceeds forecast is 5% and 20% for 2013 and 2014 respectively. The net income is expected to boost by 290% and 484,42% in 2013 and 2014 respectively.
The experts’ recommendations for Devon Energy’s stock haven’t been changed since November 2012. However, the overall picture has changed a bit since then. The situation improved for the better because the financial figures now look better than expected.
At this point, more analysts are revising their forecast, telling their audience to buy the company’s stock instead of shorting it. The forecast is around $75-80 per share.
As for Alpari, the experts report that several technical indicators (including CCI and MACD as well as 100 and 200 MAs) are now indicating an uptrend in the market of Devon Energy’s stock. If the conditions are still favorable, the price may hit $93,48 per share by January 1st, 2015.
