Dividends4Life: Plunging Oil Prices: Are There Any Winners?

Plunging Oil Prices: Are There Any Winners?

Posted by D4L | Sunday, February 28, 2016 | | 0 comments »

Energy stocks have naturally been hit hard by plunging oil prices. More surprisingly, many companies that should benefit from cheap oil have seen their share prices hit hard. Lower oil is also putting pressure on the market and is a major contributing factor to the slide in the S&P 500. If fundamentals take over again, certain stocks could see substantial gains given current valuations. Income investors are still collecting their dividends although speculation about dividend cuts continues to build following the cut at ConocoPhillips (NYSE:COP).

Looking at the field of low oil price losers including energy companies and the broader market, it would be surprising not to find some company shares benefiting from the drop. Surely companies that consume lots of oil should be seeing their stock prices explode as profits take off. Yet the Dow Jones Transportation Index is down 15% since July 31, 2014. Automakers are also typical beneficiaries of oil price declines since cheaper gasoline helps boost sales of higher margin SUVs and pickup trucks. But like the airlines, profits have boomed at the Detroit Three but shares declined leading to valuation compressions at Ford, GM, and Fiat Chrysler.

Source: Seeking Alpha

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