# Stocks that will benefit from lower oil prices?



## Canadian (Sep 19, 2013)

With all this talk about the drop in stocks because of oil I'm interested in looking at the other side of the situation. If oil does not bounce back immediately what sectors or specific stocks do you see benefiting from reduced costs? I've been thinking about transportation companies like Transforce or Trimac who could benefit from reduced gas prices.


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## gibor365 (Apr 1, 2011)

LIQ and similar.... when people depressed , they drink more


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## Canadian (Sep 19, 2013)

+1

So then also DR in case they drink too much? :stupid:


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## gibor365 (Apr 1, 2011)

Canadian said:


> +1
> 
> So then also DR in case they drink too much? :stupid:


No, DR has only US exposure  low oil prices will hit first of all AB and this is where LIQ operates 
btw, when people drink more, they also smoke more....so I'm also bullish on PM, MO, BTI etc


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## Canadian (Sep 19, 2013)

I'm thinking some consumer stocks will benefit as well (again, lower transportation prices).


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## gibor365 (Apr 1, 2011)

if you thinking about transportation prices...than practically everything (except oil producers ) can benefit....Metro, Loblaws, Air Canada, West jet, shoppers drug mart , industrials, dollarama, keg.un, bpf.un and other restaurants etc
on the other hand when people are depressed, they consume less (again except alcohol)


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## Canadian (Sep 19, 2013)

True, most will benefit from that regard - I guess it's a matter of who will benefit _most_ (i.e., aside from buying some of the energy companies at lower prices, finding a way to play the price drop)


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## Beaver101 (Nov 14, 2011)

gibor said:


> No, DR has only US exposure  low oil prices will hit first of all AB and this is where LIQ operates
> ...


 ... didn't you sell your LIQ when the markets were rallying earlier this year or you felt bullish on LIQ?


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## Synergy (Mar 18, 2013)

Canadian said:


> With all this talk about the drop in stocks because of oil I'm interested in looking at the other side of the situation. If oil does not bounce back immediately what sectors or specific stocks do you see benefiting from reduced costs? I've been thinking about transportation companies like Transforce or Trimac who could benefit from reduced gas prices.


A lot of this appears to have been already priced into the markets. Take a look at the charts - Energy (XEG) vs Consumer (Metro,Loblaws, etc.) and / or Transportation (TFI). If oil continues to fall this may continue to be a decent trade, but it appears that we may be getting close to a bottom.


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## MoreMiles (Apr 20, 2011)

Hummer, GM, Ford...

People won't mind filling up their gas guzzlers everyday. Hummers will sell more to macho men who want to show off.:biggrin:


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## gibor365 (Apr 1, 2011)

Beaver101 said:


> ... didn't you sell your LIQ when the markets were rallying earlier this year or you felt bullish on LIQ?


No, I didn't ... Did you?! 
I feel that LIQ dividend is more sustainable than for example LRE's.... Price on "human fuel" won't be falling 40% in a couple of months


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## newfoundlander61 (Feb 6, 2011)

Air Canada and Westjet.


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## m3s (Apr 3, 2010)

MoreMiles said:


> Hummers will sell more to macho men who want to show off.:biggrin:


Hummer didn't survive GM's bankruptcy. The last civilian Hummer was based on a compact pickup truck :tongue: US Army could barely give the mil-spec ones away..


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## Rusty O'Toole (Feb 1, 2012)

UAL has been shooting the moon. Cheap oil is good for the airlines.


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## HaroldCrump (Jun 10, 2009)

Cheap oil will also benefit Chinese & Japanese economy.
Anyone notice the massive Shanghai stock rally in the last 5 days or so?
Composite is up nearly 10% just in 5 days....
Japanese stocks also surging upwards.


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## JordoR (Aug 20, 2013)

My Westjet has been doing great lately.


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## Rusty O'Toole (Feb 1, 2012)

I'm planning on buying oil stocks. Not right away, will wait till they are good and stinko and no one will touch them, then wait till they start to show signs of recovering. The buy low, sell high theory.

UAL has already gone from below 40 in October to 67. It may go up more, I don't know, but the time to buy was 2 months ago.


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## dime (Jun 20, 2013)

I might be repeating someone else here, but transports should do well. Westjet WJA and Transforce TFI are both on my watchlist to find an entry point. I've held DAL and ALK on the US side for a year or so and I expect they should do even better now with the drop in fuel prices. 

BA has a huuuuge backlock of planes that have been ordered and Valueline gives them top rank for timeliness and safety. If the transports are doing well, the're likely to be ordering more to replace their aging fleet. Its a solid name in aviation.

I just added to my CP position yesterday. Looking for an entry in CNR. It makes sense to me that the rails will have lower costs going forward, but there is some speculation that the lower cost of crude will lower their profits somehow. But it's not the demand that's dropped, it's the huge increase in supply (which still needs to be shipped). So maybe someone else knows the logic behind why rails have been selling with this drop in energy....


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## gibor365 (Apr 1, 2011)

ihmo when prices for oil is down for a long time, it won't benefit any stock.... it just will lead to global recession ... before oil went below 70, S&P was doing pretty good, but after- all North American stocks were sharply down....


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## Rusty O'Toole (Feb 1, 2012)

I see. If oil prices go up, that kills the economy. But if oil prices go down, that kills the economy too.


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## gibor365 (Apr 1, 2011)

Rusty O'Toole said:


> I see. If oil prices go up, that kills the economy. But if oil prices go down, that kills the economy too.


Exactly! If oil prices going up for short term because of some hurricane or US bombing some small oil country or there is uprising insuch country - it would be good for oil stocks, if it goes short term down - for example from temporary oversupply - it will be good for some stocks , like airlines or car producers... But in situation that we have today, AB (who feeds majority of Canada) can really go down, Canadian economy will go down, people will save and spend less money on flights, new car or restaurants... so companies profits will fell down, stocks will go down...this is like domino reaction...

All markets got scared from uncertainly and this what we have...no one knows what going on... logically, so low oil prices bad for every oil producing country....even though I agree that politics is not logical matter


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## Rusty O'Toole (Feb 1, 2012)

When the economy was booming through the fifties and sixties oil was between $2 and $3 a barrel. When oil shot up in the seventies we had "stagflation", stagnation and inflation which was supposed to be impossible.

In the 80s and 90s when oil was cheap the economy was good, when oil went up it was bad.

So, I am going to take it that cheap oil is good for some but bad for others but on the whole, better than high prices and scarcity.


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## gibor365 (Apr 1, 2011)

Also you cannot compare 1998 with 2014... 
I don't know how many drivers were in China in 1998, but Total number of Chinese drivers in Q3 2010 was 200M.
Total number of Chinese drivers surpassed 300M in Q3 2014, up 100M in 4 years.
Expected total number of new car sales in China for 2014 is 23M.
In 2013, the US had about 0.8 cars per capita, China 0.26 and India 0.18.
The birth rate in the US is 13 per 1000 people, in India it is 21.


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## etfstrader (Sep 26, 2014)

gibor said:


> Exactly! If oil prices going up for short term because of some hurricane or US bombing some small oil country or there is uprising insuch country - it would be good for oil stocks, if it goes short term down - for example from temporary oversupply - it will be good for some stocks , like airlines or car producers... But in situation that we have today, AB (who feeds majority of Canada) can really go down, Canadian economy will go down, people will save and spend less money on flights, new car or restaurants... so companies profits will fell down, stocks will go down...this is like domino reaction...
> 
> All markets got scared from uncertainly and this what we have...*no one knows what going on*... logically, so low oil prices bad for every oil producing country....even though I agree that politics is not logical matter


I'm very sure those commodities/currencies speculators know what going on. Have a look at below WEEKLY chart and you can tell there is a strong correlation between oil and USD currency within last 10-year. Besides, I added in blue vertical lines to show both oil and stock market tend to rise together after these sell-off events. About low oil prices kill economy, there isn't any data from last 20-year showing such low oil prices would trigger economic collapse.


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## gibor365 (Apr 1, 2011)

Check chart comparing price of oil and SPY and take a look at 2008-2009


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## etfstrader (Sep 26, 2014)

gibor said:


> Check chart comparing price of oil and SPY and take a look at 2008-2009


You can see that equity market was peaked first by Oct. 2007 where oil was peaked at July 2008. That recession was triggered by subprime mortgage meltdown in 2007, not by low oil prices though.


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## avrex (Nov 14, 2010)

Betting oil will fall further? Look beyond the obvious - David Berman



> The big idea now is to buy stocks that stand to benefit from cheaper energy.
> So what do you do?





> *1. Buy a broad index fund and tune out.*


This is probably what most investors should do.
But, since you're reading this thread, you're probably looking for other ideas. 
Read on...



> *2. Fight the trend.*
> ...buying sectors where the news is overwhelmingly bad and selling sectors where the news is oh-soperfect. It's called being a contrarian.
> Ideally, you're buying stocks close to the point of maximum pessimism, when all the bad news is priced in and good news cannot even be imagined. Then, you wait.


The news about Canadian Oil stocks is pessimistic. It could be a good time to buy now, or perhaps in the new year.
There's been a lot of good discussion on this forum about oil stocks. Check out the thread, Dividend safety of Canadian oil stocks for ideas.
Also, there's lots of good discussion within the Individual Stocks/Equities threads.



> *3. Join the trend but look for less-obvious winners from falling energy prices.*
> European stocks are compelling....cheaper oil could boost the euro zone's gross domestic product by half a percentage point next year.
> Among U.S. stocks that will benefit from rising consumer spending.... Amazon.com Inc.
> ...Walgreen Co., Starbucks Corp. and CarMax Inc.
> ....companies with fleets of planes and trucks will enjoy lower operating costs....U.S. airlines....FedEx Corp


European stocks are so beat up, I'm starting to look at them more seriously now (i.e. more contrarian thinking). Currently, I hold nil.
I'm continuing to look for value in individual US stocks.


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## Eder (Feb 16, 2011)

I think Cargojet Inc will benefit not only from cheaper fuel but also from increase of online purchasing in Canada. Trades thinly so not for everyone. 

My Trimac stock has weathered the storm quite well, but I would have thought it would have risen much higher than it has.

I'm camping next to some corn,soybean,hog farmers from Iowa here in Marathon Key. They are relishing cheaper fuel this coming season, maybe putting more money in their pockets for shiney new equipment? 

Tire companies like Goodyear should get a good boost as well.


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