Eni SpA (ADR) (E): A Dream Stock in Oil & Gas Industry

Back in the day, the management of Eni stated that it plans to spend nearly $50 billion on the project. But according to the most recent filing, its cash and cash equivalents stand at $7.34 billion.  Since Eni owns a 70% stake in the Mozambique gas project, it might be looking to reap some rewards and reduce its risk exposure. This would not only allow Eni to continue its exploration activities, but also involve Royal Dutch Shell in its development. The latter is known for its expertise in LNG development, and Eni’s head of E&P said “Shell could be a wonderful partner.”

Conclusion

Needless to say, Eni has lots of catalysts going its way. Yet its shares trade at a forward P/E of 10.2x, indicating that it is undervalued at the CMP. Adding to the delight, its shares yield a hefty 4.78% with a payout ratio of 50.57%. Its growing reserves, cost savings, and most importantly its LNG export plant present a bright future (both short and long term) for the company. Keeping all these reasons in mind, I think Eni is going to have a dream run this decade.

The article A Dream Stock in Oil & Gas Industry originally appeared on Fool.com and is written by Piyush Arora.

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