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  • tracycai tracycai Dec 22, 2010 5:23 PM Flag

    What's going on with TOT stock price?

    At least we are getting 5% dividend while waiting for it to bounce back. The risk is limited because the floor is $51 and we know it. It is the shorts who drive the price down. Look at all Euro stocks, DB, STD, they are all very low. However, I do believe things will rotate. Think BAC, JPM a few weeks back, everyone was screaming short, but BAC has 15% run in a few days. As long as it is a good company, things will turn. I hope!

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    • Things will turn. If there's anything I've learned from the past 2 years, it's that there are smart and capable people working to support the global economy. Everybody seems to consider themselves macroeconomists these days. Well, those people have been left out of the rally, and the people maintained their focus on the fundamentals have been rewarded.

      I believe Total has rock solid fundamentals and the stock will appreciate when the macro picture turns... it may be weeks or months or years, but at least there's a generous dividend in the meantime.

      • 1 Reply to sharkbite_mcnasty
      • There are a number of reasons to be positive on this company:

        Valuation is cheap when compared to future oil production growth. Look at the majors in the US, which have declining production and you will see a multiple either greater or equal to that of TOT.

        Production growth is so important because you are getting future crude revenue growth at hopefully higher prices with widening margins on that crude. Look at the history of many of the major US companies, when they were growing production and oil prices were on the ascendent the companies demanded higher multiples, it's just that simple.

        They also have a pristine balance sheet which makes them bankable as shown by the SU deal. What a great deal for TOT, I mean think about this....SU plans to double production in the next decade, and TOT just bought into that production growth. A significant amount of the capex for development of that production has been sunk by SU over the past decade, so TOT is coming in for the payload with little remaining capex other than their upfront investment. I think these and other deals prove that TOT is going to be able to grow production for years to come even if it is at 2%.

        I am long this stock in spite of the obvious risks.

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