Foreign Energy ADRs For The Contrarian Investor

The energy sector has been grossly out of favor since BP's (NYSE: BP) deepwater Horizon oil rig exploded in the Gulf of Mexico, killing 11 and launching one of the biggest natural disasters in American history. But perhaps the contrarian in you is looking at that as an opportunity. (To learn more about contrarian investing, see Buy When There's Blood In The Streets.) Several foreign-based oil companies now offer compelling fundamentals and impressive earnings prospects as a result of the fall in crude oil prices and the media spin on Horizon. If they've been beaten down too far as a result of BP's bad press, perhaps now is the right time to consider one of them for your portfolio.

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Privatizing For The Benefit Of All
Italy's Eni S.p.A. (NYSE: E) is one of Europe's largest integrated oil and gas companies. With a market capitalization in excess of $78 billion and operations in nearly 80 countries, Eni also offers investors a fat 6.23% annual dividend and trades with a very competitive 11.7 Price-Earnings (P/E) ratio. In the last three months, the stock is down by almost 17%, lagging the broader energy sector represented by the Energy Select Sector SPDR (NYSE: XLE), which fell less than 13% over the same period. The SPDR S&P 500 ETF (NYSE: SPY), by contrast, is down only 10.6% in the last quarter.

Eni is a state-controlled enterprise, but lately lawmakers have shown an interest to implement further liberalizing measures.

Price-to-book ratio on Eni shares is 1.10, while Price-to-sales ratio stands at a mere 0.71.

Holland's Own Is Looking For A Dance Partner
Royal Dutch Shell (NYSE: RDS.A) is twice the size of Eni with a market cap greater than $170 billion. The shares yield 6.14% and trade at a multiple of 11.5 times last year's earnings.

In the wake of the Horizon disaster, there has been plenty of talk of Shell potentially seeking a merger with BP. The company's shares have fallen less than 10.5% in the last three months.

Finally, Total SA (NYSE: TOT), France's largest integrated energy outfit, is offering some very impressive value numbers. Total's P/E is 9.8, and its annual dividend yield is now 5.6%. In the last three months' trade, the stock is down nearly 16%.

Total has a market cap of $110 billion.

The Wrap
A contrarian's delight? Sometimes miserable headlines and a falling stock market conspire to create great buying opportunities. Could it be we're witnessing just such an event among the big oil ADRs?

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