When I think about the worst places you could have had money over the course of the last month or so two places come to mind. That is China and oil. So it should come as no surprise that today’s Bear of the Day has a Zacks Rank #5 (Strong Sell) rating and is the perfect, unholy intersection of the two. Now this could be the turnaround story of the year. Both areas could have bottomed out and this could be the buying opportunity of a lifetime. Or, the trend continues and the toilet continues to flush.
Today’s Bear is China Petroleum and Chemical Corp (SNP). The company is a “joint-stock” company with its core business of petroleum and petrochemicals with integrated upstream, mid-stream and downstream operations and a complete marketing network. The company's scope of business includes exploration, development, production and marketing of petroleum and natural gas, refining and marketing, production and marketing of petrochemicals, chemical fibers, chemical fertilizers and other chemicals, pipeline transportation of petroleum and natural gas.
Not only is China Petrol a Zacks Rank #5 (Strong Sell) but it also has a Momentum Style Score of “D.” Being the momentum strategist here with Zacks, it’s a tough sell for me to take a positive look at a company with a Momentum Score that bad. Remember, the momentum style score is based on relative strength to the industry as well as recent earnings estimate revisions and changes in volume. All the above add up to a bad score for China Petrol.
Shares of China Petroleum have come under pressure since late April when the stock was trading as high as $96. From there a fierce selloff has pushed the price all the way down to below $74. A dead cat bounce has taken shares back to $77 but the price still remains well below a negatively sloped 21-day moving average that’s hovering at $79.51.
This small industry of Emerging Markets Integrated Oil and Gas is in the Top 20% of our Zacks Industry Rank. But there are only four companies including SNP. If you’re looking for an alternative in this industry you can try Petrobras ADR (PBR.A). It is currently a Zacks Rank #2 (Buy).
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CHINA PETRO&CHM (SNP): Free Stock Analysis Report
PETROBRAS-ADR P (PBR.A): Free Stock Analysis Report
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