Int'l Insights: Bullish Stocks
Buying Japanese Energy StocksBelow we lay out what we believe is a compelling case to add exposure to Japanese Energy stocks at current levels.
Japan is Breaking Out. The TOPIX and Japan Hedged Equity ETF (DXJ-US) are breaking out following 5+ months of consolidation. RS (vs. MSCI ACWI) is also bullishly inflecting on both the TOPIX and DXJ ETF. We believe price and RS appreciation are in their early stages following 5+ months of consolidation... see page 2.
Energy is Emerging as Leadership Within Japan. Japanese Financials have been the leading Sector in Japan for quite some time; we have been bullish for nearly a year, and it has been the only Japanese Sector that we have been widely recommending ever since the TOPIX breakdown in July/August 2024. However, over the past 1.5-months, the Energy Sector within Japan has also been leading the charge higher and outperforming within Japan. The FTSE Japan Oil & Gas Sector now displays bullish 8.5-month price and RS inflections -- add exposure... see chart below. And Energy stocks are showing signs of price and RS bottoms around the globe as well. If Brent crude oil can hold above $68-69 and WTI can hold above $65, we expect outperformance from Energy to continue.
In today's report we highlight the following actionable names: Idemitsu Kosan Co., Ltd. (5019-JP), Japan Petroleum Exploration Co., Ltd. (1662-JP), Inpex Corporation (1605-JP), and ENEOS Holdings, Inc. (5020-JP) -- add exposure... see pages 3-4.
JXTG Holdings is a petroleum and metal industries holding company based in Japan. Co. was formed by the management integration of Nippon Oil and Nippon Mining Holdings. Co. comprises three core companies operating in the fields of Petroleum Refining and Marketing, Oil and Natural Gas Exploration and Production, and Metals. Co. conducts operations integrated from upstream resource development to petroleum refining and marketing, chemicals, copper smelting and refining, recycling and environmental services, and electronic materials. Co. operates in four business segments: energy, oil and natural gas exploration and production, metals, and others.
Idemitsu Kosan is a petrochemical company which is based in Japan. Co.'s principal business segments are petroleum products, petrochemical products, resources and other. Co. is engaged in the import, refining, production and sale of crude oil, petroleum products and lubricants, and transportation and storage relating thereto. Co. is also engaged in the production and sale of petrochemical products and electronic materials; the investigation, exploration, development and sale of oil resources, coal, uranium and geothermal resources; the import, purchase and sale of liquefied petroleum gas; and the design, construction, maintenance and management of petroleum-related facilities.
INPEX is mainly engaged in the energy supply business on a global scale. Co.'s operations include acquisition of license blocks for oil and gas fields, exploration, development, production and sales of oil, natural gas and other mineral resources. Co. is involved in about 70 upstream projects located in 20 countries around the world such projects as "Sebuku Block Ruby Gas Field," "Abadi LNG Project," "Tangguh LNG Project," "Ichthys LNG Project," "Bayu-Undan Project," "Prelude FLNG Project" and other. Co. is engaged in the natural gas transportation, pipeline operation, maintenance and management; the refining domestic crude oil; and the storage and shipment of petroleum products.
Japan Petroleum Exploration is mainly engaged in the exploration, development and production of crude oil, natural gas and other energy resources. Co. is engaged in the exploration, development, production, purchasing, sales and transportation of crude oil and natural gas, as well as the well drilling and workover contracts, geological and geophysical surveys, mud and well logging works, gas pipeline maintenance and facility security services. It is also involved in the sales and transportation of petroleum products and purchase and sale of LPG in Japan. Co. also has operations in Canada, the U.S., Indonesia, Iraq, the U.K. and Russia.
Vermilion Research delivers timely, actionable, and unique research inputs to professional investors. Our research strategists highlight securities which we believe are at major inflection points, based on our various proprietary technical indicators, and offer asymmetric risk/return profiles. We believe our research methodology, which is not limited by industry sector or market capitalization, enables us to deliver superior investment recommendations.
Our process begins by organizing all actively traded stocks into coherent sectors, then into logical industry groups. We then apply our proprietary relative strength tools to identify developing price trends. Once attractive trends are identified within a selected sectors or groups, we screen for individual stocks which we believe offer the best risk/reward profile. Vermilion offers U.S. and global equity market research products. Vermilion’s research team, which has received numerous awards and accolades, has a combined 70 year of experience in the analysis of investment securities.
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