TOTAL S.A. (TOT - Free Report) has signed a mutual preferred supplier agreement with China Communications Construction Company (“CCCC”) to expand their working relationship worldwide. At present, TOTAL supplies CCCC with fuels and lubricants, mainly in Africa.
Per the new agreement, Total and its affiliates will support CCCC on a very large scale by offering tailored solutions for construction, including financing, civil works, onshore and offshore work, pipeline construction and dredging projects located worldwide.
How Will TOTAL Gain?
This new agreement will provide TOTAL with a wide range of opportunities in Africa and beyond. In addition, TOTAL and CCCC’s complementary geographical footprint will allow both the companies to develop new commercial prospects, both as a customer and supplier of the other.
TOTAL Continues to Expand
TOTAL is an integrated energy company and has been continuously entering into strategic partnership, acquisition and merger deals to expand operations. Apart from expanding hydrocarbon reserves, the company is also boosting its green power generation capacity on a global scale through its subsidiary SunPower Corporation (SPWR - Free Report) .
It aims to attain electrical production capacity of 5 gigawatt (GW) from renewable sources within five years. The acquisition of Direct Energie, a major energy player operating in France and Belgium, will add 1.35 GW of clean energy generation capacity to TOTAL’s production portfolio.
TOTAL’s Long-Term Plan
TOTAL’s long-term outlook is likely to increase upstream production by an average of 5% per year between 2016 and 2022. TOTAL aims to achieve its target through production additions coming from the new start-ups and other projects that are still being constructed in different regions of the globe.
CCCC, a super large infrastructure service provider, can assist TOTAL in its construction projects if needed.
In a year’s time, TOTAL’s shares have returned 25.3% compared with the industry’s rally of 20%.
Zacks Rank & Key Picks
Currently, TOTAL has a Zacks Rank #3 (Hold). Some better-ranked stocks in the same industry are Chevron Corporation (CVX - Free Report) and BP plc (BP - Free Report) , each sporting a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here..
Chevron Corporation pulled off a positive earnings surprise of 31.03% in the first quarter of 2018. The Zacks Consensus Estimate for 2018 has moved up 13.2% in the past 60 days to $8.42 per share. Its earnings are expected to grow 7.0% over the long-term (3-5 year) period.
BP plc pulled off an average four-quarter positive earnings surprise of 29.58%. The Zacks Consensus Estimate for 2018 has been revised upward by 6.7% in the past 60 days to $3.34 per share. Its earnings are expected to grow 30.77% over the long-term period.
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