Oil and Mining Sector Broker Recommendations
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For those of you who like broker recommendations you will be interested to see
what the brokers have been saying about the Oil and Mining fraternity.
I tend to look at trades from a
point of view i.e. trades that I plan to keep open from anywhere between 1 and
30 days. The analysts are looking at shares and therefore looking at longer
terms trends. It seems clear that they think that prices across the board will
Real long-term investors will no doubt see a few ups and downs but they are
in it for the long game. They are investing in yield, prospects, growth etc.
So looking at a handful of recommendations of companies currently in the
FTSE 350 there is:
JKX Oil and Gas. Goldmans Sachs have gone from Neutral to Buy. Likewise
Jonathan Copus of Deutsche has increased his JKX target price from 580p to
Kazakhmys. Robery Clifford, also of Deutsche, has upgraded Kazakhmys from
Hold to Buy with a new target price up from 1820p to 1900p.
Jonathan Copus has also increased his Cairn Energy (Buy) target from 3235p
to 4290p and his Tullow Oil (Buy) target from 1070p to 1490p.
Elsewhere in mining and oil analysts have recently said: Premier Oil (Buy),
Volga Gas (Buy), Imperial Energy (Neutral), Bunzl (from Hold to Buy) and
But why? Far East growth may simply still outstrip any downturn in the
West. That and the Supply / Demand equation often fails to work quickly with
commodities. Supply is very difficult to increase and demand is almost
impossible to decrease, at least in the short and medium term.
But what to do and what is the best way to trade? Well like the adverts
say, if in doubt seek independent financial advice. As usual the best way of
protecting your funds is not to trade. Apart from that common advice is to
have a diversified portfolio. In this case perhaps a range of the oil and
mining stocks rather than one or two.
Another way of looking at the data is to read that the brokers do not think
that the current high commodities prices are just in a bubble. So with
companies like FinancialSpreads.com or
Spreads you can easily gain exposure to the commodities themselves. These
spread betting companies will let you bet on crude oil, natural gas, heating
oil, copper, silver, gold, platinum, etc. Although as with all leveraged
investments, you do need to be careful with spread betting. Also note that
most commodities are priced in US Dollars and therefore the markets will often
move purely on exchange rate data.
Spread betting carries a high level of risk to your funds. You can lose
more than you initially invest. It may not suit all investors. Only speculate
with funds that you can afford to lose. Ensure you understand the risks and
seek independent financial advice if and when necessary.
About the Author
An experienced commodities trader and writer on the
crude oil spread betting and mining futures.
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Article Published/Sorted/Amended on Scopulus 2008-09-02 22:28:22 in Business Articles