Long-term yields for U.S. Treasuries should indeed firm but be tempered by a slowing as this phase o...
01/06/2015 7:00 am EST
I always come back to this stock when someone asks me for a long-term, relatively safe investment, notes Nick Hodge, editor of the Outsider Club, in introducing his top conservative idea for the coming year.
Statoil (STO) is an oil multi-national with operations in 36 countries. And it's 62.5%-owned by Government of Norway.
I like it because it of its p/e ratio below 10 and because of its 4.9% yield. I also like it because it was 75% higher this past summer, before oil began its dramatic fall.
Statoil hasn't traded at current levels since March 2009. It's my belief that that skid in oil prices from $95/barrel to $55/barrel shouldn't wipe $43 billion in market cap off a major international player, but that's exactly what just happened.
In 2013, Statoil delivered the best exploration results in the industry, adding 1.25 billion barrels of oil equivalent from exploration activities.
And it added 700 million to 1.5 billion barrels in 2011 and 2012 when it announced a new discovery in the North Sea and another one in the Barents Sea. Those are conventional reserves I like.
And I just like the Norwegian model in general, where the government controls business through owning shares rather than regulation. It also decided in the 1960s not to go after all its reserves at once, but to bid them out in blocks.
The revenue goes into one of the best-managed sovereign-wealth funds in the world and the money is invested back into society.
That's made Norway the eighth-largest oil exporter in the world and allowed its blue-collar neighbors to make three times as much as their British peers.
All that, plus I simply don't think oil prices can remain below $60-65/barrel for any sustained period of time.
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