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Forget Petrobras, PetroRio and PetroRecôncavo: this oil company share is the cheapest on the B3 and can appreciate up to 158% in an optimistic scenario for oil; meet

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This oil stock trades at a considerable discount compared to its competitors and could more than double the money invested if the price of a barrel of oil stabilizes at $80 in the long run. (Image: Shutterstock/Editing: Julia Shikota)

When the subject is Petroleum and brazilian scholarshipthe first company that certainly comes to your mind is Petrobras (PETR4). No wonder, after all, it is the largest oil exploration and production company in the country and one of the largest in the world.

However, it has recently been making headlines in most newspapers for the wrong reasons. With the proximity of electionsPetrobras has become the target of presidential candidates who, in an attempt to garner votes, talk about political interference in the company and even in privatization to contain fuel prices in the country.

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On the other hand, there is an oil company that is drawing the market’s attention for the right reasons. She is being called the cheapest oil stock on the Brazilian stock exchangeas it finds itself with a big discount on its papers.

Unlike Petrobras, it is not in the federal government’s sights and, therefore, does not run the risk of being affected by the “political game” of the elections.

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And no, I’m not talking about companies like PetroRio (PRIOR3) or PetroRecôncavo (RECV3). These, although they are famous oil companies and with a buy recommendation from market analysts, are not as cheap as this other stock.

To give you an idea of ​​the size of the discount that the oil company in question has today, just take a look at the chart below:

Source: Empiricus Research

Rodolfo Amstalden, founding partner and analyst at Empiricus Research, the largest independent financial analysis firm in the country, was the one who “mined” this oil company on the stock exchange.

He compared the share price against expected earnings for 2023 (Price to Earnings). This indicator is often used by the market to say whether a stock is expensive or cheap. The lower the number, the cheaper the stock.

And, as you can see, the oil company is the cheapest among all its competitors. That is why, in the analyst’s view, it can be called “the cheapest oil stock on the Brazilian stock exchange”.

But of course this “bargain” should not last long. In Rodolfo’s assessment, the company tends to reap the results of well-done acquisitions in recent years and can achieve up to 158% appreciation in an optimistic scenario for oil.

I say in an optimistic scenario because, even if the oil falls, this oil company can still “take off” at least 30%. In practice, whatever the price of the commodity in the coming years, this oil company wins.

And I’ll explain to you why.

This action can make you money whatever the oil scenario

Rodolfo did the math and arrived at a target price of BRL 72.00 for the shares of this oil company, which would imply 82% appreciationif we take into account the share price at the last closing, which was R$39.54.

The assumptions used to arrive at this value, in addition to the results that the company must deliver, are a price for the Petroleum in the long term of $50 per barrel it’s the dollar The BRL 5.42.

However, as the price of a barrel of oil is something difficult to estimate, even more in the long term, Rodolfo calculated what would be the potential for appreciation of this oil stock in different oil price scenarios. Check the table below:

Estimated upside for the cheapest oil company on the Brazilian stock exchange according to the price of a barrel of oil

In practice, in the worst of the above scenarios, with the price of a barrel of oil at US$ 20, the oil company’s action can reach 31% appreciation. And, in the best case scenario, with the price of a barrel at US$ 80, it could “take off” and reach the 158% appreciation.

Translation: you are facing a stock that can put money in your pocket “anyway”, regardless of whether the price of a barrel of oil rises or falls in the coming months and years:

“Even if we consider that in the long term the price of oil drops to US$30 per barrel (something that already happened in 2016), or to US$20 per barrel (as at the height of the pandemic crisis), we still find an upside of 31% for shares, keeping the other assumptions of the model unchanged” – Rodolfo Amstalden, founding partner of Empiricus Research

And this is closer to happening than you, dear investor, imagine. After all, this company has been dedicated to making numerous acquisitions in recent years, and now it is close to reaping the rewards of that investment.

In fact, it is only a matter of time before the shares of this oil company take off. And the numbers she released in August corroborate this thesis.

Her production grew 82% from January to August – and you are in the ideal timing to invest

To say whether a company is expensive or cheap, it is necessary to relativize the value of the company by its ability to generate revenue, profit and cash. In the case of an oil company, one of the factors to boost the business is to produce more Petroleum.

Now, see how the oil production of this company grew in 2022, from January to the month of August:

Average daily production of oil in barrels (boed)

data 3r
Source: IR of the company. Elaboration: Empiricus Research.

In August, its daily average production grew 33% from the previous month. And, if we compare the production with the first month of the year, it is already 82% higher.

Despite this, Rodolfo points out that the good numbers have not yet been reflected in the share price, as the market and the stock market as a whole have been facing difficult times.

However, this “discount” is not trivial. This action, at current prices, for any attentive investor means a huge buying opportunity. For now, the market has not yet realized the size of the discount that this stock is negotiating.

See: while its competitors, PetroRio and PetroRecôncavo, negotiate at 3 times EV/Ebitda (current value of the firm divided by the Ebitda of the last 12 months), the oil company negotiates only 1.5 times EV/Ebitda 2023.

But, as productivity increases and results are delivered, as was the case in August, Rodolfo believes that the valuation of this company should converge towards numbers closer to those of its peers.

It’s a matter of time, and you’re in the perfect timing to buy. In a recently released report, Rodolfo gave details of why this action is his biggest bet of the year and the reasons that lead him to believe that it should “take off” soon.

Access to the report is generally restricted to subscribers to his recommended Empiricus Research wallet. But, luckily for you, the complete document was made available as a courtesy by Empiricus Investimentos. Just click the button below and follow the step-by-step instructions to unlock your access:

Not investing in this stock now is to run the risk of leaving a lot of money ‘on the table’…

Of course, in difficult times for the stock market and the market, it is common for investors to be apprehensive about investing in shares. Above all, securities from companies that are off the radar and with great potential for appreciation, as is the case of this Brazilian oil company.

But I must remind you that it is precisely in times of crisis in the financial market that greater opportunities for equity multiplication on the stock market. After all, it is at this point that high quality assets become absurdly cheap.

In this situation, you have two options:

  1. Failing to invest in good assets that are very cheap, running the risk of leaving a lot of money “on the table” by missing good profit opportunities;
  2. Put a little money in assets with a good asymmetry of return, recommended by trusted analysts, and see what happens.

If you decide to go with the first option, I can only regret it. But, if you happen to opt for the latter, here are the instructions to find out about a good opportunity to make money on the Brazilian stock market this year:

In this reportanalyst Rodolfo Amstalden detailed his expectations for the oil company’s action, in addition to bringing his investment rationale behind the indication.

The content, as already mentioned, was made available by Empiricus Investimentos, as a courtesy. So, you won’t have to pay a single penny to access it.

Just follow the step by step available on the button below, release your access and read the full report on the cheapest oil stock on the stock market. Then you decide if this investment recommendation makes sense for your equity:

Source: Moneytimes

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