Investors are eyeing oil-related stocks like USO, RIG, and FDX for potential profits.
From Barchart: 2024-10-18 11:30:00
Oil prices are currently low, but potential tailwinds could lead to a new rally in the commodity due to lackluster demand and supply movement. Investing in the energy sector, particularly in oil-related funds like the United States Oil Fund LP (USO), could potentially bring profits in the next quarter. Other opportunities like Transocean Ltd. (RIG) and FedEx Co. (FDX) could also benefit from a potential oil rally.
The US Oil Fund LP (USO) is a smart bet for investors looking to capitalize on rising oil prices, as it tracks oil futures daily with a team of traders and managers. Institutional investors like CWM LLC and Creative Planning have increased their holdings in the fund, indicating continued interest in the commodity and speculation of higher oil prices in the future.
Investor sentiment has shifted towards oil after Warren Buffett’s investment in Occidental Petroleum Co. (OXY) and the Federal Reserve’s aggressive interest rate cuts. Lower interest rates are expected to boost business activity and oil demand, particularly in the manufacturing sector, which has been contracting for 23 consecutive months. Chinese stimulus could also revive oil demand, potentially driving oil prices higher.
Transocean Ltd. (RIG) stands out as the market’s top energy stock due to its business model and relative valuation compared to its peers in the energy sector. With a forward P/E ratio of 64.3x and positive EPS projections, analysts have a consensus price target of $6.88 per share for RIG, indicating a potential upside of 63.3% from the current price.
Analysts project double-digit upside for FedEx stock, which could become attractive with rising oil prices. J.P. Morgan Chase reiterated an “Overweight” rating on FedEx stock with a price target of $350 per share, suggesting a potential 28% rally from the current price. Institutional investors like Value Partners Investments have also increased their positions in FedEx, indicating confidence in the stock’s future performance.
Read more at Barchart:: Top 3 Stocks to Play Oil’s Potential Comeback Rally