For many investors it will be quite pleasing to close the book on financial year (FY) 2015 given the weak performances of numerous widely-owned stocks.
While the S&P/ASX 200 (Index: ^AXJO) (ASX: XJO) eked out a gain of 1.2% excluding the benefits of dividends for the 12-month period, popular stocks such as BHP Billiton Limited (ASX: BHP) and Woolworths Limited (ASX: WOW) both ended down around 25%.
Another stock that had a bad year was Origin Energy Ltd (ASX: ORG) which – like many of its peers including Santos Ltd (ASX: STO) – suffered from its exposure to the oil and gas sector. Both Origin and Santos finished the FY significantly lower, down approximately 19% and 45% respectively.
While other big name stocks such as BHP and Woolworths have their own hurdles to overcome in FY 2016, the oil price is the single biggest swing factor for the energy majors. In Origin's case there are reasons to be positive on the group's outlook…
- First, the oil price appears to have steadied and at levels higher than some had forecast.
- Second, Origin this week responded to market concerns regarding its massive Australia Pacific LNG project and its corresponding sale and purchase agreement (SPA) with Sinopec. It did this by reassuring investors that all was in order and that it expected Sinopec would fulfil its obligations under the SPA.
- Third, Origin has reaffirmed that it remains on track to reach "sustained production" from Train 1 during the December quarter of 2015.
- Fourth, some stock brokers are supportive of the company which could encourage buyers back into the stock. According to an article in the Australian Financial Review, broker UBS recently raised its price target from $15.80 to $16.50 which compares favourably with the current share price of $12.17.
