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Author: therawinformant

  • You should watch this key metric during the reporting season that others often overlook

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    The upcoming profit reporting season will keep investors on the edge of their seats and you shouldn’t forget to scrutinise one often overlooked detail in the results.

    This is the cash conversion ratio, which most investors either do not know about or brush aside for earnings multiples and growth figures.

    Don’t get me wrong, price-earnings (P/E) ratios and sales and earnings growth are still important details this time round, as they are for every reporting season.

    Cash ratio as important as profit ratio

    But the cash conversion ratio (CCR) is particularly relevant in this COVID-19-stricken market. You’ll see why after I explain what this ratio is.

    The CCR measures the amount of cash a company collects as a percentage of earnings. Just because an ASX stock reports a $100 profit, it doesn’t mean it receives $100 in cash.

    Calculating the CCR is easy although few companies will do it for you when highlighting their profit and sales performance for the year.

    How to calculate the cash conversion ratio

    To get the ratio, you take the net operating cash flow (from the cash flow statement) and divide that by the reported earnings before interest, tax, depreciation and amortisation (EBITDA).

    Don’t get confused by the cash flow statement as it is broken into three sections – operations, investing and financing. Cash flow from operations reflects the cash a company gets from its ordinary business and what it pays to provide the service or products, and that’s the net figure you want.

    Some calculate the CCR by dividing the cash flow with net profits instead. I prefer to use the EBITDA number as amortisation and depreciation charges do not impact on cash and it produces a “cleaner” ratio.

    Why cash doesn’t match profit

    In the vast majority of cases, you will find that the net cash from operations falls short of EBITDA. This shortfall can be significant too and will vary from sector to sector.

    The general rule of thumb is that a company with a CCR of 80% or better is good. If the ratio falls below this, you should investigate why as it could be an early indication of a problem.

    So why does a company’s reported EBITDA not match the cash it receives? There are a few reasons for this. It could be a timing issue where a company recognises the profit from a sale before it gets paid by the customer.

    Another common reason is an expansion in the company’s working capital, perhaps to fund a build-up in inventory.

    Early warning sign

    That could be a bullish sign if management is expecting a big ramp up in near-term sales or is gearing up for the start of a big project.

    But in this coronavirus recessionary environment, a material increase in working capital could be a warning sign instead as most businesses will be experiencing declining sales.

    Further, many ASX companies are probably feeling a cash crunch from the COVID-19 fallout. Booking decent profits isn’t enough to stave-off a capital raising if the cash isn’t coming in fast enough.

    Final thoughts

    As I’ve written last week, capital raisings are one of the key features I am expecting during the reporting season. Paying attention to the CCR could provide an early clue of a company in need of fresh capital.

    As a final thought, the CCR is more relevant to S&P/ASX 200 Index (Index:^AXJO) companies than small caps.

    Market minnows often don’t have earnings and are still making losses. You can’t use the ratio if the EBIDTA number is negative.

    5 stocks under $5

    We hear it over and over from investors, “I wish I had bought Altium or Afterpay when they were first recommended by The Motley Fool. I’d be sitting on a gold mine!” And it’s true.

    And while Altium and Afterpay have had a good run, we think these 5 other stocks are screaming buys. And you can buy them now for less than $5 a share!

    See the 5 stocks

    *Extreme Opportunities returns as of June 5th 2020

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    Motley Fool contributor Brendon Lau has no position in any of the stocks mentioned. Connect with me on Twitter @brenlau.

    The Motley Fool Australia has no position in any of the stocks mentioned. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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  • Why investing in super can turbocharge your returns

    depositing coin into piggy bank for super, invest in super, grow super

    It’s the age-old question: should I be investing in super?

    The Aussie superannuation system can be divisive. Many, particularly the younger cohort, are reluctant to invest additional cash into their super funds.

    However, I’m a big believer in the power that super funds can have to turbocharge retirement plans.

    Here are a few reasons why investing more money in super can be a great idea for investors of all ages.

    Concessional contributions are taxed at 15%

    This is a really big factor in favour of investing in super. Concessional contributions up to $25,000 per year are taxed at just 15% by super funds.

    For reference, every dollar earned between $18,200 and $37,000 is taxed at 19%. Beyond that, Aussies are taxed progressively at 32.5%, 37% and up to 45% per dollar above $180,000 per year.

    That means investing in super as concessional contributions can generate a significant tax break. As a long-term investor myself, that seems like a no-brainer.

    I plan on using that money at 65+ anyway, so I might as well save some tax along the way.

    Investing in super means less tax on capital gains

    This is another big consideration but one that is often overlooked.

    A capital gains event generally occurs when an asset is sold. If that is outside of super and the asset has been held for over 12 months, the investor would get taxed at their marginal tax rate.

    However, capital gains within super get another handy tax break. During the accumulation phase, super funds typically receive a one-third discount on any capital gains made.

    Given super funds are taxed at the flat 15% rate, that means the capital gain would be taxed at effectively 10%.

    That’s compared to anywhere between 19% to 45% for investing outside of super if you earn upwards of $18,200 per year.

    Super funds can invest big and long-term

    Super funds have large pools of capital to invest across their various strategies. That means investing in super can get you access to investments that would otherwise not be possible.

    This includes allocations to private equity, hedge funds and infrastructure assets. These investments can generate liquidity premiums and boost overall returns.

    Investing in super is just one part of your strategy

    The good news is, it doesn’t have to be all or nothing when it comes to investing in your superannuation. You can still keep your investments outside of super, but you may need less of them.

    For instance, you could build up a sizeable portfolio of ASX shares or hold a broad market ETF like BetaShares Australia 200 ETF (ASX: A200) alongside your growing superannuation fund.

    If you retire early, you simply draw down your ETF holdings outside of super down to zero until preservation age.

    From there, your super investment kicks in and you can have a happy retirement.

    But… there are drawbacks

    Of course, if it was all good news, everyone would be investing more in super with no questions asked.

    The reality is that there is an opportunity cost of contributing more to your superannuation.

    That money is locked away for a long time and could be otherwise deployed elsewhere. For instance, you could buy ASX shares outside of super, pay down debt or save for a home deposit.

    The First Home Super Saver (FHSS) scheme does help to alleviate this in some sense, but not completely.

    There’s also a significant regulatory risk. Many investors worry that the preservation age will change by the time they retire.

    The government could also view super as a convenient way to pay back deficits through higher taxes.

    Foolish takeaway

    In the end, investing additional money in super is a personal choice. However, I think the benefits outweigh the potential risks for me as it currently stands.

    5 stocks under $5

    We hear it over and over from investors, “I wish I had bought Altium or Afterpay when they were first recommended by The Motley Fool. I’d be sitting on a gold mine!” And it’s true.

    And while Altium and Afterpay have had a good run, we think these 5 other stocks are screaming buys. And you can buy them now for less than $5 a share!

    See the 5 stocks

    *Extreme Opportunities returns as of June 5th 2020

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    Motley Fool contributor Ken Hall has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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  • Sorrento Therapeutics May Be Ready For a Pullback

    Sorrento Therapeutics May Be Ready For a PullbackSan Diego-based Sorrento Therapeutics (NASDAQ:SRNE) has become one of the hottest biopharmaceutical companies investors are watching in the rush to find a cure for the novel coronavirus. So far in the year, SRNE stock is up around 130%.Source: luchschenF / Shutterstock.com However, that number tells only half the story. In mid-March, Sorrento shares hit a recent low of $1.55. Now they are flirting with $8. That is an increase of about 400%.Put another way, $1,000 invested in SRNE stock in early spring would now be worth over $5,000.InvestorPlace – Stock Market News, Stock Advice & Trading TipsTherefore, today, I'll take a closer look at whether long-term investors should consider committing new capital into Sorrento Therapeutics. Why Investors Became Interested in SRNE StockSorrento is a clinical-stage and commercial biopharma company. Until recently, its emphasis was on immuno-oncology and non-opioid pain management. It has been working on therapies to "improve the lives of those who suffer from cancer [and] intractable pain." * 10 Cybersecurity Stocks We Need Now More Than EverThis year brought another dimension its efforts, i.e., its aggressive research on the novel coronavirus.The company claims that the immuno-oncology portfolio will allow it to develop multimodal therapies to "attack harmful cells frequently and relentlessly" and "generate the next generation of cancer therapeutics." In addition, it now has several Covid-19 therapy candidates.In fact, management is hopeful about having antibody ready by this fall. In recent weeks, SRNE stock has moved along with each news release by the company on the developments regarding their coronavirus-related trials.For example, following a press release on July 20, it surged close to 20%. The FDA gave the green light to Abivertinib for Phase 2 safety and efficacy study in hospitalized patients with moderate to severe Covid-19. The results would likely be important for patients "hospitalized with developing cytokine storm in the lungs." What Could Derail SRNE StockThe health and economic effects of the pandemic worldwide has fueled investors' love affair with small biotech firms as well as the big pharma.I'd encourage potential investors to read the company's latest 10-Q SEC filing where management highlights several important risk factors. It says, "We are a clinical stage company subject to significant risks and uncertainties, including the risk that we or our partners may never develop, obtain regulatory approval or market any of our product candidates or generate product related revenues."The next stage is in the efforts to develop a Covid-19 vaccine is expected to involve animal studies. And following potential successful results, human trials would be likely. However, the road is a long and potentially difficult one.Management also draws attention to the fact that it has "incurred significant losses since inception and [is likely to] incur continued losses for the foreseeable future." In the quarter that ended March 31, net revenue came $7.7 million. Net losses were more than $69 million.Developing effective therapies can be extremely costly, putting immense pressure, especially on a small company's capital structure. And the competition to develop a cure for the novel corona virus is intense. In addition to Sorrento, several other companies are currently working on vaccine or drug development. They include AstraZeneca (NYSE:AZN), GlaxoSmithKline (NYSE:GSK), Inovio Pharmaceuticals (NASDAQ:INO), Moderna (NASDAQ:MRNA), Novavax (NASDAQ:NVAX) and Pfizer (NYSE:PFE).It'd be important to remember that big pharma can not only discover a vaccine or drug, but also produce it in mass quantities, which is an essential part of the equation. Therefore, in the second half of the year, market participants may decide to de-risk away from smaller companies such as Sorrento.Instead, they may want to concentrate on more established names with established R&D and manufacturing facilities. Bottom Line for SRNE StockShares of many biotech companies, including SRNE stock, have seen stunning gains this year, especially since late March. Now market participants are wondering if they are somewhat late to the party or if the stock could indeed go up any further. Seasoned investors realize that big sums can be made or lost by taking a bet on a potential cure that may be developed by otherwise a small biotechnology company.Unless the company comes up with tangible results, some profit-taking in SRNE stock may be likely. Therefore, if you are an investor with paper profits, you may want to take some capital off the table.In the long run, if the company can successfully reach the finish line and develop a therapy that is accepted by global authorities, then early shareholders are likely to be rewarded even further. Potential long-term investors should appreciate the given risk/return profile of a small biotechnology company and remember that SRNE is a highly volatile stock. It makes rather substantial moves, both up and down on a daily basis.Finally, in case the company's efforts are successful, it could easily find itself a takeover candidate. Needless to say, such a development would benefit investors in SRNE stock.Tezcan Gecgil has worked in investment management for over two decades in the U.S. and U.K. In addition to formal higher education, including a Ph.D. in the field, she has also completed all 3 levels of the Chartered Market Technician (CMT) examination. Her passion is for options trading based on technical analysis of fundamentally strong companies. She especially enjoys setting up weekly covered calls for income generation. As of this writing, Tezcan Gecgil holds PFE covered calls (July 31 expiry). More From InvestorPlace * Why Everyone Is Investing in 5G All WRONG * America's 1 Stock Picker Reveals His Next 1,000% Winner * Revolutionary Tech Behind 5G Rollout Is Being Pioneered By This 1 Company * Radical New Battery Could Dismantle Oil Markets The post Sorrento Therapeutics May Be Ready For a Pullback appeared first on InvestorPlace.

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  • Replace your term deposit with these ASX dividend shares

    dividend shares

    At present the interest rates on offer with term deposits are at ultra low levels and struggling to keep up with inflation.

    In light of this, I suspect many income investors will be looking for suitable alternatives.

    But where can you turn? I think that ASX dividend shares could be the best way to replace your term deposit if you’re after reliable source of income. Especially given the generous yields on offer with many dividend shares right now.

    Three ASX dividend shares that I would buy are listed below. Here’s why I like them:

    Aventus Group (ASX: AVN)

    The first ASX dividend share I would suggest investors look at is Aventus. Although retail property companies are having a very difficult time during the pandemic, I’m optimistic that Aventus will be less impacted than others. This is because it specialises in large format retail parks and has a total of 20 centres across Australia. Its tenancies have a high weighting towards everyday needs and host high quality retailers such as ALDI, Bunnings, Officeworks, and The Good Guys. I believe this leaves it better positioned than most to ride out the storm. As a result, I estimate that Aventus shares could provide investors with a dividend yield of over 6% for FY 2021.

    Dicker Data Ltd (ASX: DDR)

    Another dividend share to consider buying is Dicker Data. It is a wholesale distributor of computer hardware and software across the ANZ region. Dicker Data has been a strong performer in FY 2020 and reported stellar growth during its recently completed first half, The company reported half year revenue above $1 billion for the first time and a 30.4% lift in net profit before tax to $42 million. In light of this, the company is on course to increase its dividend by 31% to 35.5 cents per share this year. Based on the current Dicker Data share price, this represents a generous fully franked 4.8% dividend yield.

    Telstra Corporation Ltd (ASX: TLS)

    A final ASX dividend share to consider buying is this telco giant. I think Telstra is one of the best dividend shares to buy on the ASX right now due to its defensive qualities and positive medium term outlook. Those defensive qualities have been on display for all to see this year. For example, at the height of the pandemic, Telstra was able to reaffirm its guidance for FY 2020. Importantly, this includes its free cash flow guidance for FY 2020. As a result, it appears perfectly positioned to continue paying a 16 cents per share fully franked dividend this year. And looking further ahead, I believe this dividend is sustainable for the foreseeable future thanks to its cost cutting, productivity improvements, and price increases. Based on the current Telstra share price, this dividend equates to an attractive 4.8% yield.

    Where to invest $1,000 right now

    When investing expert Scott Phillips has a stock tip, it can pay to listen. After all, the flagship Motley Fool Share Advisor newsletter he has run for more than eight years has provided thousands of paying members with stock picks that have doubled, tripled or even more.*

    Scott just revealed what he believes are the five best ASX stocks for investors to buy right now. These stocks are trading at dirt-cheap prices and Scott thinks they are great buys right now.

    See The 5 Stocks

    *Returns as of June 30th

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    Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia owns shares of and has recommended Dicker Data Limited and Telstra Limited. The Motley Fool Australia has recommended AVENTUS RE UNIT. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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  • Top brokers name 3 ASX shares to buy next week

    sign containing the words buy now, asx growth shares

    Last week saw a large number of broker notes hitting the wires once again. Three buy ratings that caught my eye are summarised below.

    Here’s why brokers think investors ought to buy them next week:

    Australia and New Zealand Banking GrpLtd (ASX: ANZ)

    According to a note out of Citi, its analysts have retained their buy rating and $24.75 price target on this banking giant’s shares. While the broker believes that the recent spike in coronavirus cases could mean further loan deferments, it isn’t enough to shift its positive view on the investment opportunity with ANZ’s shares. It continues to see value in its shares at the current level. I agree with Citi on ANZ and would be a buyer of them.

    Coca-Cola Amatil Ltd (ASX: CCL)

    Another note out of Citi reveals that its analysts have retained their buy rating and $9.85 price target on this beverage company’s shares. This follows the release of a trading update by Coca-Cola Amatil last week. It appears pleased with the volume recovery in the ANZ market and suspects volumes could surprise to the upside in the near term. And while it notes that its Indonesian business continues to struggle and has taken an impairment charge, it wasn’t overly surprised by this. While I’m not a huge fan of the company, I do think it could be worth a closer look.

    Tabcorp Holdings Limited (ASX: TAH)

    Analysts at UBS have retained their buy rating and lifted the price target on this gambling company’s shares to $5.00. According to the note, the broker’s research has shown a material increase in digital betting during the pandemic. Its analysts believe that Tabcorp has won a bit of market share thanks to its promotions. It feels this will offset some of the weakness it is experiencing in other parts of the business. Once again, it’s not a share that I’m naturally drawn to, but it could be worth considering.

    5 stocks under $5

    We hear it over and over from investors, “I wish I had bought Altium or Afterpay when they were first recommended by The Motley Fool. I’d be sitting on a gold mine!” And it’s true.

    And while Altium and Afterpay have had a good run, we think these 5 other stocks are screaming buys. And you can buy them now for less than $5 a share!

    See the 5 stocks

    *Extreme Opportunities returns as of June 5th 2020

    More reading

    Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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  • Barron’s Picks And Pans: Crispr, McDonald’s, Nikola And More

    Barron's Picks And Pans: Crispr, McDonald's, Nikola And More* This weekend's Barron's cover story examines the prospects for electric truck makers. * Other featured articles look at companies seeking a cure for sickle cell, risks associated with mortgage REITs and a bubble forming in hydrogen fuel-cell stocks. * Also, the prospects for a troubled California utility, a tobacco pick, a fast-food giant and more.Cover story "Electric Trucks Are the Future. The Stocks Are for the Bold." by Al Root suggests that though speculative fervor has sent shares of electric-truck makers like Nikola Corporation (NASDAQ: NKLA) soaring, competition is stiff and Tesla-like returns may prove elusive.Bill Alpert's "These Companies Are Seeking a Cure for Sickle Cell" points out that successful treatments would demonstrate the potential for gene therapy and boost biotech companies like Crispr Therapeutics AG (NASDAQ: CRSP).In "PG&E Looks Undervalued After Exiting Bankruptcy," Alexandra Scaggs shows why California utility PG&E Corporation (NYSE: PCG) is cheap relative to its peers, but it's difficult to assess how much of its discount is warranted.The Chevron Corporation (NYSE: CVX) acquisition of Noble Energy, Inc. (NASDAQ: NBL) appears to be a one-off, according to "The Pandemic Has Hit Oil Stocks. Chevron's Deal Isn't Enough to Change That" by Avi Salzman.In Bill Alpert's "There's a Bubble Forming in Hydrogen Fuel-Cell Stocks," see why Barron's thinks that stocks of Ballard Power Systems Inc (NASDAQ: BLDP), Plug Power Inc (NASDAQ: PLUG) and other makers of hydrogen fuel cells are in danger of jackknifing.See Also: Is Now The Time To Short Tesla's Stock?"Tobacco and ESG? One Cigarette Maker Sees a Perfect Match" by Jack Hough takes a look at why Philip Morris International Inc. (NYSE: PM), aiming to build a smoke-free future, recasts itself as an ESG (environmental, social and governance) play. Will investors buy it?Companies like Annaly Capital Management, Inc. (NYSE: NLY) use leverage to boost returns, and some have cut dividends due to the pandemic. So says Lawrence C. Strauss's "Mortgage REITs Carry Double-Digit Yields — and the Risks That Come With Such Yields."In "Americans Are Antsy. McDonald's Stock Could Get a Boost From the Drive-Through Window," Ben Levisohn makes a case that hard-hit Mcdonald's Corp (NYSE: MCD) stock could see improvement as Americans get sick of staying at home.See more from Benzinga * Barron's Picks And Pans: Biden, ESG And Reopening Picks * Barron's Picks And Pans: Brunswick, Cloudflare, Gilead And More(C) 2020 Benzinga.com. Benzinga does not provide investment advice. All rights reserved.

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  • Pelosi against extra jobless benefits temporary extension

    Pelosi against extra jobless benefits temporary extensionEvercore ISI Head of U.S. Public Policy and Political Strategy Research Sarah Bianchi joins Yahoo Finance’s Akiko Fujita to discuss the latest stimulus negotiations in Congress, as Republicans delay the unveiling of their $1 trillion stimulus plan to next week.

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  • Casino Stock Analyst Says Things Are Going From Bad To Worse In Vegas

    Casino Stock Analyst Says Things Are Going From Bad To Worse In VegasThe initial reopening of the Las Vegas Strip went relatively well for casino operators in early June, but abysmal room rates and a second wave of the COVID-19 outbreak seems to have eliminated hope that the Vegas recovery will continue any time soon.Las Vegas Sands Corp.(NYSE: LVS) management told investors this week that Vegas is suffering "a world of hurt," and the U.S. gaming hub has a long way to go in recovering from its shutdown, according to BofA Securities.The Numbers: Pricing of Las Vegas Strip hotel room rates for the month of August is now down 40% from a year ago. Pricing conditions on the Strip have worsened since June 12 when August rates were down just 31%. September prices are also down 37% year-over-year, suggesting little improvement heading into the fall.Vegas strip operators Las Vegas Sands, MGM Resorts International (NYSE: MGM), Wynn Resorts, Limited (NASDAQ: WYNN) and Caesars Entertainment Corporation (NYSE: CZR) are taking a hit from the plummeting room rates, BofA analyst Shaun Kelley said in a note.Las Vegas Sands recently closed the Palazzo back up for weekday reservations after midweek occupancy levels dropped to 25% or lower."We see little reason to think these operating challenges are exclusive to LVS and we have seen recent furloughs from WYNN in addition to layoffs at the Tropicana and Circus Circus," Kelley said Friday.Bleak Outlook: BofA estimates Las Vegas Sands will take the smallest hit on room rates in August, down 13% compared to a year ago. Kelley said Wynn will take the largest hit, with room rates down 52%.Las Vegas Sands management said this week there is no evidence investors should expect the city's group and convention business to return anytime soon.KAYAK flight search data for Las Vegas is reportedly down 68% from a year ago. Clark County, Nevada reported more than 1,000 new COVID-19 cases on Thursday for the fifth day in the past week.Benzinga's Take: The two biggest questions for Vegas casino stock operators at this point is will reopened casinos stay open and how long will it take for travelers to return?For long-term investors looking to play the recovery, Bank of America has the following ratings and price targets for major Las Vegas casino operators: * Las Vegas Sands, Buy rating and $61 target. * Wynn, Buy rating and $95 target. * MGM Resorts, Underperform rating and $15 target.Related Links:Analyst: End Of Quarantine Restrictions 'Very Positive For Our Macau Stocks'Analyst: 'Trends Are Encouraging' For US Regional CasinosSee more from Benzinga * What Are EV Regulatory Credits And Why Is Tesla Selling So Many Of Them? * This Day In Market History: The Liquidation Of Corporate Fraud ZZZZ Best * Tesla's Valuation Still 'Appears Overcharged' Following Q2 Earnings(C) 2020 Benzinga.com. Benzinga does not provide investment advice. All rights reserved.

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  • SunTrust Likes Chevron, ConocoPhillips, Neutral On Exxon

    SunTrust Likes Chevron, ConocoPhillips, Neutral On ExxonSunTrust Robinson Humphrey analysts initiated coverage of the three major U.S.-based oil giants but suggested only two should be bought by investors.The Analyst: Welles Fitzpatrick initiated coverage of the following three stocks: * Chevron Corporation (NYSE: CVX) at Buy with a $120 price target. * ConocoPhillips (NYSE: COP) at Buy with a $51 price target. * Exxon Mobil Corporation (NYSE: XOM) at Hold with a $41 price target.Dividend Policy: The three majors are known for offering low risk and stable dividend and the recent oil downturn forced the companies to defend payouts, even at the expense of cutting capex, accumulating new debt or shedding assets, Fitzpatrick wrote in the initiation note.The three companies offer investors a yield ranging from 4% to 8% versus a 20-year average of around 3% to 4%. The premium versus historical norms implies there are some concerns about the longer-term sustainability of dividends.Among the three companies, Chevron's dividend is the "most sustainable" and ConocoPhillips has more upside if oil trades north of $70. Exxon can't organically cover its dividend obligations until 2022 or beyond unless there is a recovery in its refining business.Cashflow: Oil and gas production accounts for around 90% of estimated 2022 cash flow for ConocoPhillips, followed by Chevron at 70% and 30% at Exxon. If product pricing moves up 10% and oil pricing stays flat, Exxon would have a free cash flow yield of 7% which allows it to cover capex and dividends organically. Chevron would still offer a better free cash flow yield at 11% and Exxon would look "more attractive" in this scenario.2020 Outlook And beyond: All three companies will lower their production in 2020 before stabilizing in 2021, the analyst wrote. All three companies have "gone big" in unconventional production, especially in the Permian region.Companies with large scale projects that only have the tail end of capex left boast a near-term advantage. Chevron can count on Tengizchevroil while Exxon can count on Guyana.In fact, Guyana represents the majority of additional volumes for Exxon in 2022 and 2023 and Tengizchevroil should account for the majority of Chevron's 3% compounded annual growth through 2024. By contrast, ConocoPhillips offers less of a growth prospect but "we still recognize the longer-term value," the analyst wrote.Related Links:OPEC Warns Second 'Strong Wave' Of Coronavirus Will Lead To Drop In Oil DemandUS Oil Imports Are Up In July: Why One Analyst Says Trend Unlikely To ContinueSee more from Benzinga * Analyst Reacts To Disney Indefinitely Delaying 'Mulan' Release * Fox Sports CEO: Baseball Is Back And Fans Are Excited * Meet Chowbus: The Food Delivery Company Focused On Asian Restaurants(C) 2020 Benzinga.com. Benzinga does not provide investment advice. All rights reserved.

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  • Tesla Q2 2020 Earnings: Stock Price Targets Popping

    Tesla Q2 2020 Earnings: Stock Price Targets PoppingTesla released its Q2 2020 earnings report last night, and analysts responded with a flood of price target increases for Tesla stock (NASDAQ:TSLA). We’re finally starting to see a significant number of analysts with price targets in excess of $1,000, although the company’s valuation still gives most analysts pause. The automaker reported $6 billion in revenue […]

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