In general, we are negative long-term on the oil & gas industry as the world’s political capital is firmly behind clean energy. On the other hand, the last 10 years show that energy investing has been terrible so the most sensible thing for an investor is to be very selective and not buy into the whole industry.
Stocks to watch
While equities in general are looking for direction things are happening beneath the surface. Autodesk (ADSK:xnas) delivered a downward revision to its FY outlook on both EPS and revenue. Shares were down 8% in aft-mkt trading. The revision was clearly a shock to investors as analysts are overall very bullish on the stock with 73% having a buy recommendation on the stock. But the reaction to the Q2 earnings was natural as the company has an aggressive valuation that needs constant hits against estimates.
After having been separated for 10 years the two giant tobacco companies Philip Morris (PM:xnys) and Altria (MO:xnys) are in advance talks to merge and become the world’s biggest tobacco company with a market value of $195bn. The reaction to the news yesterday was quite negative after initial positive reaction. Watch the two stocks today for any signs of a reversal.
Thomas Cook (TCG:xlon) shares are down 95% since June last year as profitability has deteriorated and investors have questioned the company’s ability to honour its liabilities. But the big news today is a rescue plan led by Chinese Fosun Tourism Group providing $522mn in capital in an overall rescue deal of $1.1bn. While the news is positive for bondholders, shares are down 17% in today’s trading session as Fosun is acquiring 75% of the tour operator division and 25% of the airline. The 2022 6.25% bond was up 48% initially but is now only up 7% for the session.