Does the Budget Deal Favor Oil Stocks...
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Ida Hansen
Does the Budget Deal Favor Oil Stocks?
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The budget deal moving towards enactment into law is bullish for the oil and natural gas energy, and stocks ranging from Big Oil such as Exxon Mobil (NYSE: XOM) and Chevron (NYSE: CVX)  to small caps such, Octagon 88 (NASDAQ: OCTX) and Americas Petrogas (OTC: APEOF).

A major benefit is that there are no new taxes in the legislation.

That protects the energy sector, which is always a target for new revenue measures.  This will continue a very bullish period for oil and natural gas firms.  Investors who have already gained should continue to do so into the future.

The new budget deal also places a premium on dividend-paying stocks like Exxon Mobil and Chevron.  Pensions are being revised so that workers have to cover more of their retirement costs.  That makes Exxon Mobil and Chevron more appealing due to the rich dividend yields.  As reported on previous articles on this site, oil companies are known for having a robust dividend yields.

Small caps will benefit, too.

Octagon 88 and Americas Petrogas have very valuable holdings.  These should be worth even more now that the threat of new taxes has abated.  As a general rule, smaller firms trade at lower valuations.  For long term investors, that is very appealing.

The budget deal is expected to pass and be signed into law early next week, as reported by The Washington Post.

Its sudden appearance and likely rapid passage is a sign that Congress and The White House want to work together.  That is bullish for the global economy, not just the energy sector.  But what is positive for the world’s economy should take the share prices of Exxon Mobil, Chevron, Octagon 88, and Americas Petrogras much higher.

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