How much can you believe the analyst ?
July 14th, 2008 | by winsonlee |There was a point of time crude oil price went up to $147 per barrel. Some analyst would recommend you to buy Woodside Petroleum(WPL) or Santos Limited (STO) as petrol price is going up like shooting star. Credit crisis is hitting Australia quite badly and most banks suffered losses. But oil mining company hasn’t been effected at all. What is mention by the analyst is true. But to my opinion, i would consider it as bullcrap. These company hasn’t drop much ever since their peak in May and June. Would you buy $60.70 hoping that it would go up to $120 when the economy is so badly effected now ? No doubt that Iran did their missile testing recently. US fear that Iran will be attacking israel as Iran claim that their missile is capable in reaching Israel. If there is a war between US and Iran, the production of oil in Iran will be greatly effected. This means that the share price for these company will go up IF the war do happen. In a way you are putting a bet on a company hoping that the war will happen. If it doesnt, the share price will remain stagnent for a period of time. There are many shares out there which will be a better bet. It will be easier for a cheap share to go double instead of an expensive share one. If the war is not happening, credit crisis has already push the share down to the bottom. If the war do happen, the share price will go even lower. Either way is a win win situation. Can you believe that price per earning for Woodside is still 39.56. WPL close at $60.70. That means WPL is earning $1.53 / share. There are many company out that have PE below 10 which is worth considering.
Woodside Petroleum Limited (WPL)
Santos Limited (STO)
