3 Great Stocks That Benefit From Lower Oil Prices

Over the weekend, large oil producing nations failed to reach an agreement with regards to capping off current global production levels. Saudi Arabia asserts that Iran should limit its production as well, but Iran has not pledged its participation in curbing its output levels. Because of this, Saudi Arabia is no longer agreeing to limit its production. This has killed any hopes of establishing a freeze on global oil production.

This news has brought oil prices down today. As long as the commodity continues to be produced beyond demand levels, the price of oil will stay relatively low. Many analysts think that OPEC nations could continue to increase their oil production through the year. 

If this happens, you can take advantage of oil prices trending lower.Below, we outline three stocks that have an inherently short position on oil. This means that they stand to gain as the price of oil stays low because they use oil to carry out their business operations. Each of the stocks hold a Zacks Rank #2 (Buy) or better, and stand to lower their expenses as a result of being able to purchase cheaper oil.

Air France-KLM (AFLYY - Snapshot Report)

Air France-KLM is a Franco-Dutch airliner that transports tens of millions of passengers each year.AFLYY is a Zacks Rank #2 (Buy), and it has a market cap of $2.88 billion.

Air France-KLM has some nice growth and value metrics to back it up. The company has a current cash flow growth of 27.08%.The airliner’s EPS is projected to grow by 189.33% this year.It also trades at a PEG of just 0.15, suggesting that the company may be undervalued. AFLYY also trades at a forward PE of just 4.27, while the rest of the industry’s average PE is 10.14.

Controladora Vuela Compania de Aviacion (VLRS - Snapshot Report)

Controladora Vuela Compania de Aviacion is an airliner that engages in passenger transport. The company also has a focus on non-passenger services as well, transporting cargo shipments, animals, fresh food, and more.Controladora is a Zacks Rank #2 (Buy), and the company has a beta of just 0.49.

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