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Show DAILY HERALD Sunday, OTi THE WALL STREET JOCRl The Weekly Guide U Managing Your Monty C2004DowJon6Gmpfny,Inc.AnRiiihtiRaewe& httpwidayi.wtjxom Advance Fee? Oil Stocks May Keep Barreling Along 9 ' By Gkegoet Zucxkbman Pumped Up prices are falling back, So why are oil stocks will the black stuff continue to generate green for shareholders? Some smart investors are banking on it For more than two years, oil prices chugged higher, amid grow--, ing demand from a rebounding global economy, worries about disruptions of supply from the Middle East and limited capabilities of U.S. refineries. But pressures have eased a bit After hitting a high of $48.70 a barrel on Aug. 19, crude oil futures have fallen for most of the past month. They closed at $42.81 Friday, giving back almost all of a gain they tacked on during trading Thursday. Behind the downturn is a view in the industry that the end of the busy summer driving season win reduce energy demand and that tensions will ease in hot spots, including Venezuela and Russia, keeping supplies in place. Some investors jumped off the oil bandwagon when prices failed to top $50 a barrel, figuring the market had come too far, too fast Oil piKM Wl WHW MM WWpVW H IV WW run-u- INHI In p WM W I Will WtIIV RRVHM fVt WJWIMNi i U theDriwofcruoolearlihbyeatBut8sihe " IHW company is hoping to increase Its stake in Russian oil giant OAO Lukoil Holdings, sxcording to a Russian government official running an auction for the shares; a Conoco spokesman has declined comment Mr. Leggate argues that any profit from Russia could disappoint because of high taxes there. 60S 'V,. i :.."s-.- i- - r M 2004 Rising oil prices this year have hurt the Dow Jones Industrial Average, and their retreat has helped boost it in recent weeks. Last week, the Dow gained 0.5, leaving it up 7.4 since the Sept 11 attacks three years ago. The Nasdaq Composite Index rose 2.7 for the week, and is up 12 over the" three-yea- r span. Falling oil prices usually put pressure on shares of energy companies, which generally crank out better earnings when oil prices are on the rise. Not this time around. In fact energy-relate- d stocks are on a roll, thumbing their collective iwvca at ths ursatneciB in nil nrippfi The OSX, an index of stocks traded on the Philadelphia Stock Exchange, has jumped J J 38 AS if llirifci mi. panies," says Doug Leggate, an analyst at Citigroup. "The bottom line is that even $30 oil is still a good place to be for a lot of these companies." Another reason investors are turning to oil shares is that these stocks haven't risen nearly as much as oil and gas prices themselves in the past year or so, giv- -. ing them value. In fact most still have priceearnings ratios on a par with the overall market or even lower. The shares were hurt by concern that the rise in oil was short-terbut now that it seems prices won't head below $30 any time soon, investors are coming around to these companies. Marathon's Mix (I- IT 1 Sowrn: WSJ MM DM Gmp; ReoM about 10 since Aug. 19, even as oil futures dropped in the same period. Shares of major oil companies are up about 7 since oil prices started their fall, according to Dow Jones Statistics. Behind this counterintuitive move is a group of savvy investors betting that energy companies will do well as long as oil prices stay close to these levels, or even fall somewhat They say that as long as oil stays above $30 or so a barrel, these stocks will be able to rack up impressive earnings cause many of these companies have business plans that assume much lower energy prices. For example, Rick George, chief executive officer of Suncor Energy (SU), a Canadian company that specializes In mining oil from the sands of Western Canada, has said that oil prices above $25 a barrel or so are sufficient for Suncor to rack up impressive profit growth. Suncor stock is up about 20 since May. dollars or $43 a bar"Forty-tw- o rel is still very healthy for oil com Stocks on a Roll Borrower, Flee major energy companies with exposure to other areas, such as the chemical business. In move that some shareholders fear might weigh oa Conoco's debt load, the , OHarvk stocks tfdnt keep ipace with the panies, traders say, sensing more opportunity in the stocks. That is part of the reason giant (CVX) has risen past $100 a in four share, up' about 12 months, even as the overall market struggles. The stock has a trailing priceearnings ratio of about 11, below the market average. Now that energy stocks have rallied, however, it is more difficult for investors to pick up bargains.' Though most of these shares still command priceearnings ratios below the market's level, some analysts also warn that crude-oi- l price zigzags win have an impact on many of these stocks. If oil prices fall back, stocks like Exxon MobN (XOM) could be af, fected, analysts say. "If oil falls by $10 a barrel, Exxon and other oil stocks may do nothing, as the overall market rallies" thanks to the falling oil price, says CitJgroup's Mr. Leggate. s Mr. Leggate frets about (COP), which is close to a high. He thinks it is more susceptible to lower oil prices than Chevron-Texac- Price Zigzags Among the reasons oil prices may stay strong: recent signs that oil inventories are more depleted than expected. Some hedge funds, the largely unregulated investment pools for institutions and the rich, have switched from oil futures and options to shares of oil and gas com- - SepteinlmU 2004 o Some analysts also see Occidental Petroleum (OXY) shares as sensitive to movements in oil prices. Many analysts, however, see declines of more than $10 a barrel as unlikely-a- nd say oil shares could hold up better than the rest of the market in coming months, particularly If a terrorist attack did seriously disrupt supplies. Some industry specialists prefer Marathon OJ (MRCtt, which has a mix of earnings from various energy businesses. The company is small enough that, if it hits a gusher in Libya or Angola, it will be a big boost for earnings, they, say. B.J. Willingham of Houston-base- d hedge fund Moncrief Willing-haEnergy Advisers LP recommends that investors look at small and midsize stocks, and take advantage of any weakness in the shares by scooping up bargains. His firm has purchased shares in Brigham Exploration (BEXP), a company with a market value of just $400 million that he feels will grow earnings at about 20 a year for the next few years through its exploration strategy, even if oil prices fall back. He also likes Carr-fzo OH A Gas, (CRZO), a $200 mil- lion exploration firm with a stellar balance sheet TIP OF TKZWEZX """" million Ameri cans, according to a re-- . cent report by the Federal Trade Commission. The scam Is fairly simple. In ads or phone calls, a purported lender offers guaranteed loans or credft cards, regardless of the appHcsnft credit history. Some even pretend to represent Visa or MasterCard. All you have to do to take advantage of this tempting offer Is to first pay a fee of $200 or $300. The trouble is, after you have paid your fee, the loan or credit card never comes through. Some people get an application form that they can send hi to a bank. Others receive promotional materials for other offers. Many simply never hear from the company again.' 'The overriding principle Is, don't pay in advance for a loan,'' says Steven Baker, director of the Federal Trade Commission's Midwest region. He says legitimate lenders never guarantee loans before reviewing a person's credit They also don't demand upfront fees; typically, fees are collected when complaints roll in. If you already have fallen victim to one of these scams, you can report It to the FTC by calling tolWree The case will be at Where do you think crudeoil prices will be by year end? Energy stocks? of getting your money back. ' By Andnw Blackmail fcwuBuwB3ftrtjM IHIStflll ready are pumping WWAMi BOUND? WhB rebounding t inrn8MNrAtkws,totawjonet ' Industry Avwags remains off 1.3 ant th Kasdaq yeaMo-dats" i fillllEf ; ,s MUSICAL THEATRE flat-ou- t I New Economic Indteator Arrives: the Census Bureau is set tomorrow to release its first Quarterly Services Survey, a measure of revenue in the service sector. The initial data will be for the fourth quarter of 2003 and the first two quarters of 2004. announces IIS r 1 in . I I 200 H A , M , i i A sic:8tin Fall dance classes for the entire family! Beginning Tuesday, Sept. Retailers Report Results: Best Buy reports Wednesday, followed by Circuit City Friday. On Tuesday we'll see the Commerce Department's tally of retail sales for August LAST Airlines Struggle: US Airways could be forced to seek Chapter 11 bankruptcy-cour- t protection from .creditors as early as today, after a faction of its pilots' union leader-ship council blocked a plan to put a cost-cuttin-g proposal out to a vote last week. Delta Air Lines said ,' it would slash 7,000 Jobs and abanWorth hub to cut don its Dallas-Fo- rt $5 billion in annual costs. inpjBX will, be an impor- - tant Indicator (jiff the economic outlook and the likelihood of future erest-rate increases. Int- bamnrx Root Semm Edjto Briu L. Croak News Bom Mukfyatr Arr Distcrot . HeattfrCara Costs Mae: Employer healtfvcare premiums rose 13-- 2 this year In the U.S., slower than hi 2003 but the fourth straight year of double-dig- it gains. The average family premium for a PPO plan now costs more than $10,000 a year. 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Calli ' r Quattrone Sets JaJ Time: Former star Investment banker Frank Quattrone was sentenced to 18 months In prison for obstructing a ' government probe Into how CSFB allocated shares In coveted initial public offerings of stock. c 7 l " CSFB See Traction: Federal Reserve (toirman Alan Greenspan gave a generally restrained outlook In testimony to Con' gress, but did say the recovery has traction." some "regained Dcrid Crook Bono jyiovement Ekmer Plans Departure: Under fire from shareholders, Michael Eisner said he plans to step down as Walt Disney's chief executive when his contract expires in two years. eco-nom- "' x allr o om, alliet, objections. Tracking Inflation: Concerns TV "'"11 IT1 and potential European regulatory about inflation have eased in recent months, as the economy hit a soft patch. But Thursday's 7 WEEK A fedOracle Qets the eral Judge ruled that Oracle can pursue its hostile takeover bid for rival software company PeopleSoft. Oracle still faces hurdles, including a possible Justice Department appeal ani AIM reached a tentative $450 million settlement c aitegstlons that they' allowed mutual-funmarket-timintrading... to oafarecasMng twup warned that the energy Industry may be unable to meet world demand by 2b20.Tfte U J. trade deficit narrowed to $50.15 billion In Jury from a record $55.02 billion m June. introducing 0QSlOL7C?0)IEK? Youth (nnOCOEiDLro (ED CS3H3 (IIIIlKiniLTIk - Tuesdays 4-6p- theatre - 8 week course $35month m Teens Cr young adults - join Utah County's only J aiz Choir! Thursdays Call di- these scams frequently disappear after several weeks, as consumer INVESTOR'S CALENDAR OPEC Meets: The Organization of Petroleum Exporting Countries meets Wednesday in Vienna. With oil prices still above $40 a barrel, the group is considering raising Its official oikxjtput targets though it may not mean much at the local gas station as OPEC members al- the loan is closed. As for Visa and MasterCard, they say they dont rectly solicit customers. The small companies running added to a database used by law enforcement There's a siim chance Conoco-Phllllp- Write: credit? No probtamf the advertisements Mam They offer, guaranteed toans tout first you have to pay a fee. Unfortunately, a loan isn't what you're likely to fat. Instead, count on a big raadaeha. Aivancee toana" were the most common scam In 2003, suckertng4.5 764-0535 for details or visit Vvww.csmtc.com |