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Are Any of These Shares a Buy?: Gulf Keystone Petroleum, SSE, and Unilever

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By Royston Wild, The Motley Fool

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LONDON — I have recently been evaluating the investment cases for a multitude of FTSE 100 companies.

Although Britain‘s foremost share index has risen 8.4% so far in 2013, I believe many London-listed stocks still have much further to run, while conversely others are overdue for a correction. So how do the following five stocks weigh up?

Gulf Keystone Petroleum
Despite Gulf Keystone Petroleum‘s mammoth 1.6 million pound cap, the firm is currently listed on the London Stock Exchange’s AIM index rather than the FTSE 100. The company holds a raft of promising oil assets in the Middle East, although I would advise investors to stay their hand until the results of its long-standing litigation battle is known.

Shares have trained gradually lower in recent months as fears surrounding its ongoing litigation with Excalibur Ventures drags along. The latter has claimed up to 30% of Gulf Keystone‘s massive oil assets in Kurdistan, Iraq, in a legal battle that has been roiling since mid-2011.

A decision on the matter is expected some time in the summer, and I expect a ruling in Gulf Keystone‘s favor will blast share prices higher, with positive drilling results in recent times underlining its excellent growth prospects.

In February, testing at its Bakrman-1 exploration well yielded another discovery at the Akri-Bijeel Block in Kurdistan, while it is also due to ramp up exploration and development work at the gargantuan Shaikan oil field in coming months.

SSE
I am backing electricity provider SSE to remain a stellar pick among income investors owing to its juicy dividend policy. And stakeholders can be confident of future payout rates due to its ultra-defensive operations in the utilities sector.

SSE‘s projected dividend yield of 5.8% for the year ending March 2013 remains well north of the 3.5% FTSE 100 average, and forecasters expect this to advance to 6% and 6.3% in 2014 and 2015, respectively. The firm continues to build chunky shareholder payouts, with 2012’s dividend of 80.1 pence expected to rise to 84.4 pence, 88.2 pence, and 92 pence in the following three years.

City analysts expect earnings per share to accelerate over the medium term, with growth of 1% in 2013 projected to increase 3% next year and 8% in 2015.

The company is changing hands on a price-to-earnings (P/E) ratio of 13.1 for the current year, but it is expected to fall to 12.7 and 11.8 in 2014 and 2015, respectively, which I consider a decent value given steady earnings growth estimates and rising shareholder payouts.

TUI Travel
Travel operator TUI Travel provides excellent growth prospects owing to its rising market share in Britain and key European markets and increasing activity through its online platform.

In its February update, the firm advised that it had shifted almost a third of its mainstream summer holiday packages already, with summer 2013 bookings in the U.K. and Nordic regions up 9% and 10% on year, respectively.

City brokers anticipate earnings per share to rise 7% in the …read more
Source: FULL ARTICLE at DailyFinance

Business, Finance, Occupation & Industry

Should I Buy Gulf Keystone Petroleum?

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By Harvey Jones, The Motley Fool

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LONDON — It’s time to go shopping for shares again, but where to start? There are loads of great stocks to choose from, and I’ve got my wallet out. Could Gulf Keystone Petroleum juice up my portfolio?

Shaikan all over
There is something alluring about oil exploration stocks. They hold out the promise of riches — if all goes to plan. A certain breed of investor obsesses over them. Some strike black gold, while too many get their fingers burned. Independent oil and gas exploration and production company Gulf Keystone Petroleum is one such stock.

This 1.67 billion pound AIM-traded company has enthralled investors ever since announcing a “world-class” discovery in its Shaikan block in 2009. Could it turn out to be the gusher many investors hope for? And should I buy it?

If you’re looking for a safe and solid stock to build your retirement on, then look elsewhere. Any company seeking its fortune in the Kurdistan Region of Iraq, one of the world’s final-frontier-of-oil markets, is going to be risky. On top of standard oil-exploration risks, you have to be prepared for massive political risk. The Kurds, who sit on an estimated 45 billion barrels of oil, are looking to consolidate their autonomy by building closer links with Turkey and the West, but they risk riling the Iraqi government as a result. Baghdad is looking suspiciously at Kurdish oil reserves and the region’s independence aspirations.

Major and minor issues
There are legal issues, too. Gulf Keystone is embroiled in a legal battle with former advisor Excalibur Ventures, which claims it was cheated out of a 30% interest in its oil assets. The court’s verdict has been delayed and isn’t expected for several months.

Victory would be sweet for investors and could speed moves to list Gulf Keystone in the FTSE 250 or even precipitate a takeover. Chevron, Exxon, and Total have all been rumored to be lining up bids at some point. Defeat, however, could deal the share price a painful blow.

And all that is quite aside from the central issue of whether Gulf Keystone will successfully tap into those lucrative oil reserves. Its mid-February update suggested progress, with oil found at its part-owned Bakrman-1 exploration well, the second discovery on the Akri-Bijeel Block, where Gulf Keystone holds a 20% stake. The company decided to abandon its Bijeel-3 well but said that Shaikan, in which it owns a 51% stake, should be up and running shortly.

Not like other stocks
You can’t value a stock such as this in the standard way. I’m used to seeing companies with an operating margin of, say, 5% or 10%. Gulf Keystone‘s margin is -1,016%. There is no dividend and no PEG, while forecast earnings-per-share growth for 2014 is a mind-boggling 1,696%. That’s a jolly nice return — if you can get it.

Some investors have high hopes for this stock. On the message boards, wide-eyed punters are openly dreaming of Gulf’s …read more
Source: FULL ARTICLE at DailyFinance

Business, Finance, Occupation & Industry

Should You Buy Gulf Keystone Petroleum?

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By Royston Wild, The Motley Fool

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LONDON — AIM-traded oil explorer Gulf Keystone Petroleum  has seen its share price drift lower in recent months, the stock declining 18% during the past two months to around 186 pence recently.

The company has gradually divested its Algerian assets since 2009 in order to focus on the lucrative Kurdistan region of Iraq. And revenues could be set to explode in the medium to long term as its work in the Middle East ramps up.

However, the company comes attached with a heightened risk profile — Gulf Keystone is battling Excalibur Ventures in the courts about ownership rights to its Iraqi assets, fears over which continue to weigh on the share price. I believe that investors should resist leaping in until the outcome of the legal spat becomes clearer.

Positive E&D news continues to flow
Gulf Keystone announced late last month that its Bakrman-1 exploration well had made another discovery at the Akri-Bijeel Block in Kurdistan, the second discovery there after the Bijell discovery made in 2010.

The well — which targeted Jurassic and Triassic reservoir zones — tested 2,616 barrels of light oil per day, as well as 5.86 million standard cubic feet per day of natural gas. Testing is continuing and is expected to conclude next month.

Less appealing were the results of testing work at the Bjell-3 appraisal well, which disappointed after the company failed to encounter a commercial inflow of hydrocarbons. Appraisal work is continuing with the Bjell-7 well, which was spudded in December.

Meanwhile, at the gigantic Shaikan oilfield, Shaikan-7 — the first deep exploration well there — and the Shaikan-10 development well are scheduled to spud in the current quarter. The field is believed to contain almost 14 billion barrels of the black stuff.

Courting potential trouble
The legal outcome following the trial with Excalibur Ventures, which wrapped up at the start of March, could take up to three months to be announced. Excalibur is claiming up to 30% of Gulf Keystone‘s huge oil assets in Kurdistan in a legal battle that has been in progress since mid-2011.

A ruling against Gulf Keystone is likely to smash future revenue forecasts and derail further takeover talk — ExxonMobil was rumored to be circling in late 2011 before the legal challenge saw it withdraw its interest. Consequently I believe that the investment risks remain too high to justify a solid investment case at the present time.

Drill for riches with the Fool
Gulf Keystone Petroleum comes attached with great growth potential, but there are also other great natural resources opportunities out there waiting to be realized. However, drilling for oil and mining for minerals is often a hit or miss business where the timing, and indeed quantities, of potential payloads are extremely unpredictable.

To help you avoid these potential pitfalls, The Motley Fool’s “How to Unearth Great Oil and Gas Shares” report gives an expert view on how to make a fortune from what lies under our feet. Click here now to download …read more
Source: FULL ARTICLE at DailyFinance