XOM - Why You Should Watch the World's Most Hated Oil Company
If you invested in Petrobras (NYSE: PBR) during the days of $150 oil and never sold, you lost your shirt -- and probably lost patience with any Brazil-related stock. Collapsing oil prices during the 2008-09 Great Recession, coupled with a massive bribery scandal involving the oil firm, sucked the value right out of Brazil's resident fossil fuel giant. But after years of mistrust, new leadership, and class action lawsuits, happier days are here again. After three months of gains, can Petrobras keep heading higher from here? Here's what you need to know once you add this to your watch list.
First, Petrobras has strong fundamentals backing it up. Brazil's government supports fossil fuels, and Petrobras owns most of the deep-water oil fields off Brazil's Atlantic Coast. It's in charge of nearly all of Brazil's natural gas production and distribution. Brazil mixes sugarcane ethanol with its gasoline – and Petrobras owns nine ethanol plants .
It's also shedding more bad skin. Class action lawsuits revolving around the bribery schemes known in Brazil as the Car Wash scandal are behind it. On July 1, Petrobras sold its remaining stake in its gas station company, BR Distribuidora, raising around $2.3 billlion . After years as the most indebted oil company in the Americas, Petrobras is paying dividends again, and this sale helps keep its roughly 3.2% yield in place. (For contrast, Colombian oil and gas company EcoPetrol (NYSE: EC) yields 0.63%; ExxonMobil (NYSE: XOM) is 5.52%.)
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Why You Should Watch the World's Most Hated Oil Company