I am buying Gazprom shares this week, and here’s why?

Written by: Stanko Iliev
September 10, 2020
  • Gazprom is a stable company and one of the most undervalued stocks in the energy industry
  • The company has paid more than $12B dividends to its shareholders in the last three years
  • Gazprom increased its gas supplies to China in July and August to 12M cm/day from ~10M cm/day in June
  • Gazprom reported recently that Q2 net profit fell 17% Y/Y but the main reason for this is connected with Covid

Gazprom (OTCMKTS:GZPMF) is a global energy company that holds the world’s largest natural gas reserves. The company accounts for 12 % of the global gas output and 68% of domestic gas production. In only several months the price of this stock has weakened from $8 below $5 and the recent sell-off created an attractive opportunity to invest in this stock.

Fundamental analysis: Stable company with good fundamentals

With the market cap of only $54.19B, Gazprom continues to be one of the most undervalued energy stocks on the market. The company increased its revenue in 2019 to $123.4B from $118.01B in 2018 and the growth projects will ensure that the numbers will be moving up in the future.

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If we compare total stockholders’ equity of $232B and the market capitalization of $54.19B we can also notice that this stock is undervalued. Gazprom also increased its profit in 2019 to $19.3B from $20.8B in 2018 but Gazprom’s shares fell through support on fears of the coronavirus Covid-19 pandemic environment.

Another useful information for potential investors is that this company has paid more than $12B dividends to its shareholders in the last three years and this number can be even bigger in the future. Gazprom reported recently that Q2 net profit fell 17% Y/Y but the main reason for this is connected with the economic fallout from the spread of the Covid-19. Gazprom supplied China with 300 million cubic meters of gas in 2019 and the positive news is that company plans to increase exports to China in the upcoming years.

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Technical Analysis: The price is very close to the psychological resistance

Data source: tradingview.com

When we take a look at the chart above ( one year period), we can see that the price of this stock has weakened from $8.5 to $4 and started to raise. On this chart, I marked current resistance and support levels. The current supports levels are $4.5 and $4, $5 and $6 represent the current resistance levels. If the price jumps above $5 (psychological resistance level) it would be a “BUY” signal and we have the open way to $5.5. Rising above $6 supports the continuation of the bullish trend and the next price target could be located around $7. If the price falls even more in the upcoming period, every price in a range from $3.5 – $4 could be a very good opportunity to invest in this stock.

Summary

The market capitalization of this company is only $54.19B which makes Gazprom one of the most undervalued stocks in the energy industry. Gazprom has paid more than $12B dividends to its shareholders in the last three years and this number can be even bigger in the future. Shares of Gazprom could be a very good investment option and most financial analysts are also expecting its price to rise considerably in the next several years.