Oil and gas investing starts with the investor ascertaining what gas and oil stocks he must invest his hard-earned money into. While some will Concentrate on gas and oil stocks that yield a greater return on investment chances such as oil sands stocks.
1) Is the Oil Stock Overvalued?
This is probably the first question you should ask yourself as a lot of oil stocks are more hype than the actual value. A good indicator of an oil stock value is the oil stock price-earnings ratio. You can do investment in oil wells via https://www.hornetcorp.com/
If the price-earnings ratio is greater than 20, we would suggest you further investigate why the oil stocks price-earnings ratio is so high.
If it is due to an aggressive growth strategy including recent land acquisition. A large drilling program that is to take place in the future, attempt to determine the impact these events will have on the oil stocks earnings.
In a lot of cases, the future event's impact on the oil stock will not be what the investment community foresees.
2) Trust Unit versus Common Share
There are a significant amount of oil and gas stocks that have converted to become trust units. The main purpose of these oil stocks becoming trust units is to save and defer tax to unitholders.
However, the distributions that these oil stocks (trust units) payout require a significant amount of cash flow and therefore reduce the growth capability of the specific oil stock.