While there has been a great deal of attention focused on oil companies in Latin America lately, investors looking to buy should focus their attention on Ecopetrol SA (EC, quote), rather than YPF SA (YPF, quote) or Repsol SA (REPYY, quote). There is still too much turmoil for all but the most intrepid of investors to consider Repsol or YPF just yet due to the political leadership in Argentina.
But Ecopetrol has been performing well and should continue to do so based on its financials.
Ecopetrol is a major oil and gas firm based in Bogota, Colombia, with a market capitalization of over $120 billion: it is big oil. Not only is Ecopetrol big oil, it is big oil rising. Trading near its 52-week high, Ecopetrol is up 41.87% for 2012.
This rise should continue as both sales and earnings-per-share growth are each up more than 60% on a quarterly basis. Earnings-per-share growth this year is up 43.59%. A low price-to-earnings-growth ratio is positive for future increases in revenues, and ultimately for the share price.
In addition to the growth aspects of Ecopetrol, the income component is very compelling, too. With the average dividend yield for a stock on the Standard & Poor’s 500 Index being around 2%, and the dividends of YPF and Repsol considered to be shaky according to some reports, Ecopetrol SA has a 6.56% dividend yield.