By Dr. Steve Sjuggerud (Daily Wealth | Original Link)
If you’re an oil billionaire, who do you turn to for advice?
Oil billionaires Gordon Getty and T. Boone Pickens have turned to a man named Kurt Wulff…
Kurt is “in his sixth decade of analyzing opportunities in the oil and gas industry,” according to his online bio. He doesn’t seem to be slowing down…
At DailyWealth, we love his work. He actually provides much of his work – for free, after a delay of a couple weeks – on his website www.McDep.com.
A few weeks ago, he wrote up a Norwegian oil company as a “Contrarian Buy.”
I’m talking about oil and gas producer Statoil.
Kurt pegs Statoil’s fair value at $44 per share – 79% higher than its share price today. Statoil also pays a near-4% dividend.
The company has made “a string of new discoveries on top of growing production from past discoveries,” Kurt explains.
The story is not limited to the oil off the coast of Norway either: “… other prospects in the U.S. and Canada may contribute 20% of corporate production by about 2020.”
Your downside risk is limited, as Statoil has “modest debt” and is based in (and taxed in) “one of the financially strongest countries in the world.”
Kurt’s biggest reason for concern at the time of his initial write-up in June was that Statoil’s shares were in a downtrend. But fortunately, that has changed.
In DailyWealth, we prefer to see some semblance of an uptrend – as confirmation that our idea is on the right track – before we pile into an investment idea. We like the fact that Kurt Wulff thinks the same way.
Shares of Statoil bottomed for this year in June, the same month of his write-up. The shares have been in an uptrend since. The danger of buying into a downtrend has passed… It appears Kurt will get this one right.
On a risk-to-reward basis, you can set up a smart trade in Statoil with the odds stacked in your favor. For example, you can set your stop-loss at the June lows (the closing low for 2012), which is only about 10% down from today’s price. Meanwhile, your upside potential – if Kurt is right – is about 79% from here.
If you’re a regular DailyWealth reader, you know some of my colleagues have expressed their concerns about oil prices – and the risk that oil prices may fall… But by using a 10% stop-loss, you will be out of the trade if Kurt is wrong.
So you have 10% downside and 79% upside. The setup hardly gets better.
Check out Kurt Wulff’s work at www.McDep.com. Poke around at his income ideas… learn about his “McDep ratio”… and read his Statoil write-up.
I am no expert in oil and gas… But I like Kurt’s work… the uptrend is here… and the risk-to-reward profile here is right. Check it out.