Don’t Miss the Long Haul; Ignore Volatility: Suncor Energy Inc. (SU), Exxon Mobil Corporation (XOM), Phillips 66 (PSX)

Phillips 66 (NYSE:PSX) is a recent spin off from ConocoPhillips. In the name of clarifying their corporate strategy, Philips 66 was created to focus on the midstream and downstream businesses. For investors who are looking for stable investments, a midstream and downstream firm offers much more stability than a purely upstream firm. Refining makes up around half of net income, but Phillips 66 plans to expand their midstream and chemical segments to bring down refining to a third of net income.

Their debt load is reasonable for the industry, with a total debt to equity ratio of 0.39. Their ROI of 19.4% and a ROA of 10.4% are healthy, but ExxonMobil has a stronger overall numbers. Analysts expect 2013 earnings to come in around $7.20 per share, which means you can pick up the company for a forward PE ratio under 10. As an individual stock Phillips 66 is new and not that well known.

Conclusion

Getting past the stress of the news cycle isn’t easy. Still, there are some companies which are not exposed to massive risks and work great as stable long term investments. The large integrated oil companies like Exxon use their mix of upstream and downstream assets to stabilize earnings. Suncor isn’t as large as Exxon, but it has a good mix of assets and is based in a very stable nation. Phillips 66 operates in the midstream and downstream sectors, which are inherently more stable than the volatile upstream world. For more adventurous investors, Suncor and Phillips 66 are good options. ExxonMobile’s decades of experience make it a good option for more conservative investors.

The article Don’t Miss the Long Haul; Ignore Volatility originally appeared on Fool.com and is written by Joshua Bondy.

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