Brent crude oil has risen from about $84 to $98 in the previous two weeks as the Russia-Ukraine conflict has escalated. With this serving as a catalyst, here are a few stocks to watch when the oil market heats up again.
Stocks to Watch
Transocean Stock
Transocean Ltd. ( NYSE:RIG ) is a high-risk penny and one of the stocks to watch out for. The stock has rebounded 30% from its $2.33 intraday low, which it has touched twice in the previous several months. From a technical standpoint, this is crucial since the daily chart exhibits a double-bottom pattern that might act as a springboard for an upswing. With trading volume increasing, the stock ( NYSE:RIG ) might be aiming toward $4.00, a significant near-term resistance level.
Fundamentally, the world’s biggest offshore oil driller has a vast $6 billion backlog, perhaps the most appealing investment compon ent. A shift away from outdated drillships and toward more modern rigs bodes well for efficient cash flow.
The constraints here include a heavily leveraged balance sheet due to the 2018 purchase of Cyprus-based Ocean Rig. This increased the company’s fleet size but at a high cost. Transocean now has five times as much debt as cash, making it difficult to borrow additional money, particularly as interest rates rise.
Overall, the risk-reward ratio seems to be somewhat tilted to the positive in this case. Most Wall Street analysts are positive about t...
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