January 27, 2012
Written By John Buckingham
“Total S.A. (TOT) is one of the world’s largest publicly-traded, integrated oil and gas companies. Its global businesses cover three segments: 1) upstream exploration and production, 2) downstream refining and marketing and 3) chemicals. We view Total as an attractive international major oil play due to its low cost structure, high profitability potential and solid balance sheet.
“While continued sluggishness in gas prices and the weakening European economy create near-term headwinds, the French oil giant expects existing projects to spur long-term growth. The company is also considering potential upstream acquisitions, including those that would build up its Canadian oil sands operations. Too, its valuation is compelling as the stock currently trades at less than 6 times estimated consensus forward earnings. Its price-to-sales multiple of 0.5 leaves the shares changing hands at a discount to its integrated oil peer group. And, last but certainly not least, giant-cap Total currently offers a dividend yield north of 5%.”
John Buckingham, The Prudent Speculator, January 2012