Replies to post #2599 on The Rising Influence of Rising Affluence

[DewDiligence]

Barclays oil & gas analyst, Paul Cheng, likes Imperial:

http://blogs.barrons.com/stockstowatchtoday/2012/03/22/imperial-oil-the-best-of-exxonmobil-barclays-sees-35-upside

“We think Imperial Oil composes the best of ExxonMobil. On one hand, Imperial Oil benefits from ExxonMobil’s (XOM) rigorous financial discipline culture, fortress-like balance sheet, project execution, and R&D capabilities, which are considered the gold standard in the industry. On the other hand, Imperial Oil accounts for the bulk of ExxonMobil’s growth opportunities. This combination makes Imperial Oil a distinctively positioned and attractive investment.”

This may well be true, but Imperial (ticker: IMO) trades at a considerable valuation premium to the parent company, XOM; moreover, I tend to be gun shy about stocks that are majority owned subsidiaries insofar as there have been numerous cases of minority shareholders being shafted.

p.s. Cheng meant to say comprises rather than composes in the quotation above. Cheng’s English may need some help, but he knows energy stocks pretty well, as far as I can tell.