At the moment Coal businesses are out of favour with ESG concerns and its probably not going to reverse. Are oil and gas stocks such as Woodside starting to get on this list as well and will this be a legitimate concern of investing in Woodside in the next 5 years or so?

Hi Paul,

At the moment Coal businesses are out of favour with ESG concerns and its probably not going to reverse.

Are oil and gas stocks such as Woodside starting to get on this list as well and will this be a legitimate concern of investing in Woodside in the next 5 years or so? Personally, I think Woodisde is undervalued at the moment and in two years time today;s entry point may prove very attractive. However, i am concerned that fund managers may not touch it given ESG concerns.

A: I think ESG concerns are increasingly driving investor behaviour, and this is one of the reasons why coal companies and oil/LNG producers such as Woodside are languishing.

Despite the oil price increasing to around USD$70 per barrel, Woodside shares are still trading under $24.00. Admittedly, the LNG price rise hasn’t quite matched the oil price rise, and Woodside is undergoing a CEO transition, but that all said, its performance has been disappointing.

There is probably some value in Woodside with the brokers’ consensus target price of $27.53 about 16.5% higher than the current ASX price of $23.66. However, I am wary of the ESG issues, and while I like Woodside, I don’t see any attraction in being overweight the energy sector.


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