Petroleo Brasileiro S.A. (ADR) (PBR)

On the oil side of the equation, this Brazilian-based company is the 800-pound gorilla in Latin America oil-producing economies, beating out all other sectors (I believe) in the following countries: Argentina, Chile, Colombia, Mexico, Peru and Venezuela. (Actually, I'm not if Venezuela beats out PBR, but considering the hostile political environment that President Chavez holds, I'd not bet on any Venezuelan oil company directly). And the numero uno oil producer in Latin America (at least in a free enterprise system) is the national oil company of Brazil. For the same reasons I'm investing in ILF and EWZ, I am pushing PBR as well. As of 2/29/2008, PBR makes up a full 26.5% of the MSCI Brazil Index Fund (EWZ). I think all three of these picks are excellent long-term picks. Its EnterpriseValue-to-EBITDA is a decent 10.5, meaning its earnings are fairly good for the amount of money someone would have to spend in order to buy the company outright. I'd prefer this number to be down at 7 or less, but 10.5 is okay.

With revenue at a very healthy one-third of its market cap, PBR has certainly had a great run-up, already pushing a P/E of 24 (trailing P/E). But it continues to perform with profit margin of 12.6%, operating margin of 20.4%, quarterly revenue growth of 10.7%, and debt is medium-low (33.1% of equity) for this industry giant. My only concerns are the slightly negative quarterly earnings growth (-2.80%) and free cash flow is slightly negative. Hopefully, those numbers will improve over the next 3-5 years.

Over the long term a weakening dollar along with strengthening oil prices should benefit the stock of this Brazilian oil company. China's Sovereign Wealth Fund will continue to invest in natural resources in developing countries which should counter any deflationary price pressure on depletable resources.

another horrible day on wall street and another purchase of stock... I am at 50% in equities now and 50% cash

oil has been on a tear as everyone knows, but not all oil segments have participated with huge gains... enter the international integrated oil companies... most of these companies have massive market capitilzations and over the next 2 to 4 years will benefit from being integrated.... I am not a big fan of small cap US stocks in oil and the same goes with gold... watch what happens to these speculative companies when the oil bubble bursts... an integrated company touches everything in the chain so as long as oil is in demand regardless of price, these companies will perform.... remember they all refine oil which benefits from lower oil prices

it will be interesting to see what wall street rotates into this 3rd quarter starting in July or if it sticks with the commodity plays....

virtually every top 100 caps player has this as a green thumb... just sort by player rankings and see for yourself

petroleum int'l integrated has been in the top 10 industries for 11 of the past 52 weeks, making it ranked the 12th hottest industry group in the past year...

petroleum machinery & equipment, drillers, us exploration and field service have seen their stocks go through the roof the last 3 months vs the int'l integrated.... so I am a little leary of buying into those industry stocks right now.... i feel the safest and best bet are the big cap intl integrated....

on a side note.. with the markets falling off a cliff, my bottom fishing picks have not fallen barely at all... see my $ picks

This company is not leered to the U.S. economy and is continuing to drill for oil. It is also back very much by Ken Hebner @ CGM Focus Fund (which had a nice 70% return last year). I think PBR is going to outperform the market over the next year or so.

Petroleo Brasileiro SA (PBR) is the largest company in Brazil operating as an integrated oil and gas company with operations in upstream, midstream and downstream segments. The company has proven reserves of approximately 11.77 billion barrels of oil equivalent (BOE) and pumps an average 2.22 million BOE per day.

The company has worldwide proven reserves to production ratio of 15.4 years, which is higher than the industry average. This places it in a secure position as its reserves are sufficient to support production for a long time. PBR's strategy is to expand its operations in the entire South American market. Further, the company has plenteous experience operating offshore where a majority of its reserves are located. With the worldwide drilling locations moving to more complex locations, PBR expansion will yield good returns. This is assumed on the basis of its past experience in working in complex locations.

Approximately 90% of PBR’s reserves are located in Brazil, and due to local government intervention, it is sometimes forced to sell products below international market prices. This is because 32% of its shares and 55.7% voting rights are with the Brazilian government. If this situation of compelling PBR to sell at lower prices persists, it would be difficult for it to recover costs. In addition, the government has hit the company hard by increasing foreign competition and allowing foreign companies to export oil, which fetches them good prices in the international arena.

The company is largely dependent on the global demand for oil and gas, which has a direct impact on its top-line. With the increase in demand from energy hungry India and China, prices will be at higher levels in the recent future. Endorsing the strong fundamentals, the stock price has adequate scope to nurture.

This monster of a company should do well over the next five years, because it looks like they are undervalued right now, even though they are in a fast growing economy and a high demand industry. Simply a cash generating machine right now.

Petrobras has very litttle real competition on its home turf (Brazil) which is one of the very few places left in the world where billion barrel scale fields are likely to be found in the near future. The only other two areas in the world with this kind of exploration potential are Libya and the circum-Caspian (both much more politically difficult).

I know a little something about this since I am an exploration geologist and have worked in both Brazil and Libya. They also pay a pretty hefty dividend. If you chart PBR vs XOM over the last 2 years you will see the direct benefit to the shareholder of this monopoly on Brazilian exploration.

On the other hand Brazil does have its socialist tendencies and there is the Chavez factor (Venezuala's nutbag but strangely influential leader) that could concievably infect Brazil and damage the Brazialian energy sector the way he is destroying Venezualas.

Oil will go back up. Just a question of when.

http://www.ronchapmanjr.com

Brazil OIL soon to replace Venezuela as OIL exporter.

I'm home in the U.S. for Thanksgiving, and it would seem that everyone has already forgotten about the "oil crisis" of a few months ago. We are too quickly lulled into the idea that somehow we'll all be taken care of. I think I'll pick up some shares of PetroBras, sit back, and wait for the next oil spike...

Petroleo Brasileiro is Brazil's only golden boy for oil and pretty much has a lock on the Brazilian marketplace controlling over 90% of production and refinery for the country. In addition, Petroleo Brasileiro is leading the industry in deep-sea exploration/drilling and has a proven 10+ year reserve...Please let me know what other company can say that. With that said Petroleo Brasileiro is in a great position to take full advantage of Brazil's explosive growth for many years to come.

Protected Market outside of the U.S. where oil demand will be accelerating in the coming years.

This company also has access to resources and oil fields that equivalent U.S. firms don't, I believe the worldwide demand for oil is here to stay.

Oil is like real estate in San Francisco, it'll be back,
it's a limited resource, that is under demand.
Even with a green tech surge in the next few
years, we're all still going to be oil junkies.

Oil price has gone down but Petrobras is extremelly efficiente and due to some downturns in neighbour countries like Bolivia and Venezuela, Brasil will have the ability to drive its state owned company to a larger revenue on other investments that are being made to diversify and increase their portfolio.

Government won't let it fail..... recently discovered one of the largest discoveries in many years...setting on an enormous amount of oil - star stock picker Kenneth Heebner favorite....Could be a 500 dollar stock in 5-8 years....

well positioned to outperform

Petrobras offers an exciting long-term participation in the world’s most important oil discoveries of the past three years. The finds are in the Pre-Salt formation of the Santos Basin offshore Brazil under water a mile deep.

After the market decline of recent months, this now offers a better entry points for accumulating shares.

Part of the negative impact of lower crude oil should be offset by stronger refining margins. Risks remain as imports become attractive, but Petrobras' dominance in the storage / transportation
businesses could challenge those imports.

Petrobras estimated recoverable reserves of 3 to 4 billion barrels at Yara, combined with last year’s estimate of 5 to 8 billion barrels at nearby Tupi , the range of total recoverable reserves has a midpoint of 10 billion barrels. That is enough to support a million barrels a day from the ten platforms PBR has ordered for delivery in 2013 to 2016.

This is not only significant in that it will propel Petrobas into the top 5 oil players in the world but will also reduce the wests and especially Americas dependance on the Midlle East which is politically significant considering Brazils and Americas increasingly close relationship.

Oil is hot and Latin American Oil is Smokin! These guys know how to find that $100/bbl oil and they've got lots of it!

New LARGE find off the shores of a stable, non-OPEC country. This will certainly help alleviate the pressure on the cost of oil on the margin since it is a fungible commodity. Should be huge revenue stream once online.