At The Motley Fool, we poke plenty of fun at Wall Street
analysts and their endless cycle of upgrades, downgrades, and
"initiating coverage at neutral." So you might think we'd be
the last people to give virtual ink to such "news." And we
would be -- if that were all we were doing.
But in "This Just In," we don't simply tell you what the
analysts said. We'll also show you whether they know what
they're talking about. To help, we've enlisted
Motley Fool CAPS, our tool for rating stocks and analysts
alike. With CAPS, we track the long-term performance of Wall
Street's best and brightest -- and its worst and sorriest,
too.
And speaking of the best ...
With black gold once again trading north of $80, is it
finally time to buythe oil majors? If you ask
Soleil Securities, the answer is an emphatic "yes" for
Chevron (NYSE: CVX) -- but a less confident
"maybe" for rivals
Marathon Oil (NYSE: MRO) and
ConocoPhillips (NYSE: COP). The
All-Star-ranked analyst initiated coverage on all three
companies this morning, assigning a buy rating to Chevron,
but adopting a "neutral" stance on the other two.
And why should we buy Chevron but avoid its peers?
Soleil on Marathon: According to Soleil, Marathon is
embarking on an ambitious capital spending spree which will
"lower its return on capital... which already trails peers.
"
Soleil on Conoco: In contrast, Conoco's problem isn't with
expansion, but contraction. The firm's "divesting of assets
[will] be a difficult process, and coupled with a reduced
capital budget, we expect the overall earnings power of the
company to decline in the coming years."
So what sets Chevron apart from these also-rans?
Primarily, Soleil likes the valuation. Arguing that "rising
crude oil and natural gas production volumes and higher
commodity prices [will] significantly increase Chevron's
earnings and return on capital employed," Soleil predicts a
closing in the "valuation gap between Chevron and
ExxonMobil (NYSE: XOM)." The analyst predicts
Chevron will earn $5 per share this year, and rapidly ramp
that up to $8.90 next year -- numbers Soleil calls "well
ahead of consensus expectations."
But if even
Soleiladmits that it's breaking from the herd with
today's prediction, investors may wonder: Should we run
rampant with Soleil, or "stay within the lines?"
Let's go to the tape
To me, the answer's easy. Just look at how well Soleil
has done with past picks in the oil patch:
Stock
Soleil Says:
CAPS says:
Soleil's Picks Beating S&P By:
Valero (NYSE: VLO)
Underperform
*****
(56 points) (two picks)
Sunoco (NYSE: SUN)
Outperform
*** Continued... |