Buying The Santos Dip

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This story features SANTOS LIMITED.
For more info SHARE ANALYSIS: STO
The company is included in ASX50, ASX100, ASX200, ASX300 and ALL-ORDS

Michael Gable of Fairmont Equities remains a fervent energy sector bull. His view is investors should treat share price retreats as a buying opportunity.

By Michael Gable

The day-to-day movements continue to be impossible to predict but, in our opinion, we are at levels where investors can start adding to positions.

We are still confident on the outlook for resources, and precious metals are now offering low-risk entry points.

In terms of energy, we continue to believe, as we did before the war, that the mismatch between supply and demand was going to drive prices higher, and the current disruptions have only become more bullish for energy.

And let’s not forget that your average adviser/fund manager has left energy for dead in the pursuit of tech stocks.

This means most investors are massively underweight energy and serious money is going to have to be allocated to this sector at some point.

In the short-term, however, “news” of a “positive” outcome in Iran can send oil prices and oil stocks lower very briefly.

Our advice is to not chase oil exposures after a rally but to wait for some weakness to buy energy stocks – they will look very profitable by the end of the year.

Today, we offer a technical view on Santos ((STO)).

We last looked at STO on 26 January when it was trading at $6.46 and commented that “there now appears to be a low in place for STO … We expect a recovery from here in STO and current levels are a buying opportunity.”

We can now see STO hitting the long-term resistance line near $8.

It should now dip in the short-term, but any dips are a buying opportunity.

A break above this resistance line would then trigger a multi-month rally that could see STO move substantially higher into double digit prices.

Content included in this article is not by association the view of FNArena (see our disclaimer).
 
Michael Gable is managing Director of  Fairmont Equities (www.fairmontequities.com)

Fairmont Equities is a share advisory firm assisting Private Clients with the professional management of their share portfolio. We are based in the Sydney CBD but provide services to private clients across Australia. We believe that the concepts of fundamental analysis and technical analysis of stocks are not mutually exclusive. Regardless of whether you are a trader or long term investor, combining both methods is crucial to success. As a result, the unique analysis of Fairmont Equities is featured regularly in the media such as Sky News Business, CNBC, The Australian Financial Review, and the ASX newsletter. Contact us for a free trial of our research and information on our portfolio management services. 

Michael is RG146 Accredited and holds the following formal qualifications:

• Bachelor of Engineering, Hons. (University of Sydney) 
• Bachelor of Commerce (University of Sydney) 
• Diploma of Mortgage Lending (Finsia) 
• Diploma of Financial Services [Financial Planning] (Finsia) 
• Completion of ASX Accredited Derivatives Adviser Levels 1 & 2

Disclaimer

Fairmont Equities Australia (ACN 615 592 802) is a holder of an Australian Financial Services License (No. 494022). The information contained in this report is general information only and is copy write to Fairmont Equities. Fairmont Equities reserves all intellectual property rights. This report should not be interpreted as one that provides personal financial or investment advice. Any examples presented are for illustration purposes only. Past performance is not a reliable indicator of future performance. No person, persons or organisation should invest monies or take action on the reliance of the material contained in this report, but instead should satisfy themselves independently (whether by expert advice or others) of the appropriateness of any such action. Fairmont Equities, it directors and/or officers accept no responsibility for the accuracy, completeness or timeliness of the information contained in the report.
 

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