I am buying Gazprom shares this week, and here’s why?
- 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.
Technical Analysis: The price is very close to the psychological resistance
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.
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.
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