PETROBRAS-ADR

Looking closely at the Brazilian oil behemoth interprets into a good long term buy. There are a variety of reasons to 'Why'. A lot of news monitored through the last earnings release by the company seems to have been discounted in its current valuation. The company is currently trading at about six times its current earnings. Let’s not forget that we are currently in a bearish market and are certainly witnessing a lot of stocks eroding on their valuation for sure but here is a value buy.

Here are some of the reasons which would make it worth a buy. Four miles under the ocean's surface off Brazil's lush coast lie billions of barrels of recently discovered light crude - a treasure that could transform the country into an oil superpower. PBR plans to build a 600,000-barrel-per-day (BBL/d) refinery at this site. The refinery will be called Premium I. However, one of the challenges remains that they company would need to invest heavily in the machinery in order to get to the underwater reserves, , among the world's deepest, and then manage a massive influx of wealth - a formidable task that has left other national economies awash in corruption and even greater gaps between the rich and poor. The oil fields will be the most complicated and costly it has ever developed. Analysts say the project will require at least a $600 billion investment over 30 years.

We recently saw Morgan Stanley initiate coverage of Petrobras with an overweight rating and a $38 price target. However, Morgan Stanley has confidence in the company long-term and is sure that Petrobras' massive untapped reserves can be monetized in an environment with higher oil prices. It is also happy to see that the oil giant is not leveraged, like many of its peers.

The company as also reported a record monthly oil production in September with crude and natural gas output reaching 2.451 million barrels of oil equivalent. That number is up 0.4% from August and 7.6% from the same period a year ago. Average domestic oil production rose 1% from August to 1.89 million barrels a day to set a second consecutive record. The figures also represented a 7.3% increase from a year ago.