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Wednesday, 11/27/2001

AHC - Amerada Hess

Company Description

Amerada Hess (NYSE:AHC) is one of the world's largest corporations. By blending an entrepreneurial spirit with an understanding of the markets they serve, the company has grown steadily to become a major force in the international petroleum industry.

Amerada Hess' business is petroleum. Domestically and abroad, the company explores millions of promising acres both onshore and offshore. Thousands of wells produce oil and gas from the company's substantial reserves. The company's refineries, among the industry's most sophisticated and efficient, produce quality fuel oils, gasoline and other petroleum products. To move crude oil and refined products, the company operates a large fleet of tankers and other specialized vessels. Amerada Hess markets its high quality fuels to industry and consumers. The company's retail outlets provide both gasoline and convenience store items through the most modern of facilities.

(Source: Amerada Hess)

Reasons To Invest

The slippery price of oil has pressured the energy sector this year. For instance, the Oil Service Index (OSX), which is a basket of oil service-related stocks, is down by about 34 percent year-to-date. The slumping economy translated into less demand for energy, which is the main reason the sector has performed so poorly in 2001.

There's also the potential for an oil price war among the major exporting and producing countries. The Organization of Petroleum Exporting Countries (OPEC) recently agreed to a production cut in an attempt to limit supply and boost the price of crude oil. But Russia, another major player in the global oil market, said it wouldn't cut production. Price wars among oil exporting and producing countries have historically had a negative impact on the energy sector just as price wars in other businesses generally lead to negative consequences.

Why then are we looking closer at Amerada Hess? For a long term investor - we're talking about those with a timeframe measured in many years - there may be some bargains to be had in the energy sector over the next six to nine months.

The group as a whole is trading near two-year lows. Shares of Amerada Hess are near two-year lows as well. The low level of the energy sector currently may make for a compelling argument to buy at current levels. But the risk in doing so is if the price wars continue in the oil market. If the price wars do continue, then the energy sector will most likely fall under continued pressure. But an investor in for the long haul may employ a strategy of periodic, fixed-dollar investments over the next six to nine months to use any further weakness to lower the cost basis and pick up bargains in the energy sector, such as Amerada Hess. In addition, the stock currently yields a decent dividend yield of a little over 2 percent.

DRIP Information:
Shares to Qualify = 1           Accept Foreign Accounts: No
Auto-reinvestment = No          Temper Enrollment Serv:  Yes

Min/Max Investment = $50 to $5,000/quarter
Reinvestment Fees: 
Dividend: 0   Cash: 0   Auto ReInvest: N/A

Transfer Agent:

Bank of New York

1-800-524-4458

Industry Group:        Oil & Gas  52-week high=$90.40
Annual Dividend Per Share= $1.20  52-week low =$53.75
Last earnings 10/15     est=2.31  actual=1.86
Next earnings 02-15     est=1.79  versus=3.42
                                  P/E =  4.22
Analyst Ratings:
Strong Buy    = 1
Moderate Buy  = 3
Hold          = 11
Moderate Sell = 0
Strong Sell   = 0

 
 

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