*Help on deciding which stock*

[brian444]

im stuck between the following

APC APA DVN

they are all in the oil gas and consumable fuel industry if anyone could offer any insight or adive it would be much aprreciated

thanks in advance

[brian444]

also my target sell date is about a year...i need to know which will give the most bang for its buck in about a years time...as you can tell im quite a novice

[aquaswim47]

Originally Posted by brian444

also my target sell date is about a year...i need to know which will give the most bang for its buck in about a years time...as you can tell im quite a novice, of APC, APA, and DVN

There are better choices than these three. I like XTO and EOG better than these three. But if I had to pick among these three, I'd go with DVN. It's expanding at a nice pace and has a forward PE of only 11.31. DVN would be the pick I'd choose. DVN's downside is that last year, its revenue decreased. However, it had a very good cash-flow statement. It's balance sheet liquidity has deteriorated somewhat since last quarter.

I really think you should buy XTO (a competitor of DVN with only a slightly smaller market capitalization). It's a little more expensive with a forward PE of 13.22. I think XTO is a better company. It has rapid sales revenue growth (a very volatile measurement). The company is growing at a good clip.

EOG is a company that has been paying off debt; it has a stronger balance sheet than XTO and is a more conservative play. EOG has had moderate revenue growth and is expanding rapidly. The balance sheet on EOG is even more solid. It is another company to consider as well.

So if you ask me, I would buy

EOG as my first choice (It has regularly paid off debt and I love its balance sheet) - pick this as a long-term holding
XTO as my second choice - it has great fundis and is a great bargain (undervalued for 3 months) - pick this play for growth over a 1 year period
DVN as my third choice - it's the biggest bargain (may be undervalued for Year-to-date YTD) - pick this possibly as a trade.

The other two choices in my opinion are unacceptable.

Hope you do well with investing. Good luck.

[gijoe9]

Hi Brian,
ultimately you need to learn to make these choices for yourself. I am not going to reccomend any of them but I will reccomend you take time to research them yourself. If you do not know how to do this there are tutorials available free at Investopedia.com: Articles and Insight

I highly reccomend time spent reading these. That being said asking for help and advice here is not a bad thing either. Several people here are wizzes at investigating companies and analysing trends etc.. but you still have to decide what to buy so you need to be 100% sure that the choicew you make is the right one and why it is. So good luck and please keep us up to date on how you are doing.

[aquaswim47]

If I teach you how to fish, it's better than for me to recommend stocks. Normally, I look at whether a stock has a cash/AP ratio of 0.9. I like to see increasing operating cash flows, increases in capital expenditures (but not too great), and increases in paying back debt. I love a cash ratio of 0.75 or better. Lastly, I like a current ratio of at least 2.0 to 1.0 and a total assets / total liabilities of between 1.5 to 1 and 3 to 1. However, in the independent oil and gas industry, I had to settle for a cash/AP ratio of 0.55 and a total assets to total liabilities of 2.0, since the industry has more fixed assets than technology companies for instance.

I don't really take a look at the income statement; if there's a loss (my loss is net profit minus inventory) than I investigate why. I like to see decreasing losses or increasing profits. I'm not much of a sales checker for the same reason why I don't really care about net income as much as I care about net operating cash flows. Sales varies from quarter to quarter and really only matters if sales is growing faster than inventory. Basically, the income statement is important to me if I haven't already eliminated the stock.

For retail companies, you must use inventory and receivable ratios (found in any accounting book at your library). Intermediate Accounting textbooks need to be more recent; it is important to be able to evaluate a company's annual report and the notes of the financial statements.

And/or

You can look at a chart and see what pattern it's moving in. Look for resistance and support patterns as well as reversals from up-trends and down-trends.

Hope this helps. Nice comment, GiJoe.

[aquaswim47]

GiJoe is the founder of wisdom; he is as skilled in wisdom as my brother is skilled in math.

If I teach you how to fish, it's better than for me to recommend stocks. Normally, I look at whether a stock has a cash/AP ratio of 0.9. I like to see increasing operating cash flows, increases in capital expenditures (but not too great), and increases in paying back debt. I love a cash ratio of 0.75 or better. However, in the independent oil and gas industry, I had to settle for a cash/AP ratio of 0.55 and a total assets to total liabilities of 2.0, since the industry has more fixed assets than technology companies for instance.

I don't really take a look at the income statement; if there's a loss (my loss is net profit minus inventory) than I investigate why. I like to see decreasing losses or increasing profits. I'm not much of a sales checker for the same reason why I don't really care about net income as much as I care about net operating cash flows. Sales varies from quarter to quarter and really only matters if sales is growing faster than inventory. Basically, the income statement is important to me if I haven't already eliminated the stock.

For retail companies, you must use inventory and receivable ratios (found in any accounting book at your library). Intermediate Accounting textbooks need to be more recent; it is important to be able to evaluate a company's annual report and the notes of the financial statements. Looking at the annual report is critical when choosing individual stocks, but isn't as important when selecting mutual funds or ETFs.

And/or

You can look at a chart and see what pattern it's moving in. I can read a chart, but I'm not as good at explaining it as some others here.