Three Stocks That Should Benefit from 2009's Trends

The global economic crisis made 2008 a year that many investors would like to erase from their memory. A sharp rise in mortgage defaults caused banks to tighten lending for both consumers and businesses. Consumers stopped spending, businesses stopped producing, and raw material prices dropped sharply. The result was a rough 2008 that may pave the way for a solid recovery in 2009. Here are the top three trends that we see in 2009 and the top three stocks to go along with them…

The first big change in 2009 will be a new president that has promised to bring change. Barack Obama has petitioned Congress to pass an economic stimulus plan that could top $1 trillion. The plan will increase spending on public infrastructure in order to create more than 3 million jobs while improving the quality of life for Americans. The plan will also create opportunity for a few public companies.

Vulcan Materials Company (VMC) is a construction company that stands to benefit from these trends. Obama’s infrastructure plan will focus on building roads, bridges, modernizing schools and creating a clean energy infrastructure. Vulcan, a producer of construction aggregates, sees more than half of its sales come from these road and highway construction projects and stands to benefit.

A second big trend in 2009 will be the increase in oil prices as the biggest plunge in crude oil prices on record may be setting us up for a rally later this year. The so-caled forward curve of futures contracts suggest that oil prices will rise 28% to $60.00 per barrel by December. The increasing amount of supply going offline is also setting the stage for a potential shortage when oil demand rebounds.

Teekay Tankers Ltd. (TNK) is one indirect beneficiary of higher oil prices that pays out a large portion of its income. The oil tanker owner and operator is structured as a Master Limited Partnership [MLP] and therefore has to pay out the majority of its net income. Currently, the stock is trading so low that the dividend yield on this payout is in excess of 30% despite strong fundamentals.

A third big trend in 2009 is alternative energy – a combination of the two previous forecasts. Obama’s new plan calls for increased spending on alternative energies while higher oil prices will also reignite demand for such products by private industry. Combined, this is good news for the solar industry in particular as it is one of the largest alternative energy segments.

LDK Solar Co., Ltd. (LDK) is a premier solar energy play that could benefit from these trends. The firm has a strong contract backlog for 2009, but expects to see some delayed shipments in light of the current global economic crisis and tight credit markets. Meanwhile, the firm continues to show a solid cash position and unused credit facilities totaling more than $380 million and $850 million, respectively.

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Disclosure: I do not hold a position in any of the stocks mentioned.

Comments

[whisperonth...:]

Until he was elected, no one had a clue what kind of CHANGE was intended because the illustrious one never said exactly what he was planning to do. Unfortunately, no one noticed that (or refused to notice). Now we are going to find out. Good or bad, we are on that road and going where no one knows what to expect. I agree that TNK will go up, because oil is going up. The others are not in my portfolio for a reason - I want dividends. I want to know ahead of time what to expect. So I don't have non-dividend stocks and I didn't vote for the illustrious one.

Jan 06 10:14 AM

[foge:]

Yeah, cause going to his website and actually taking the time is so hard to do in seeing what he intended to do.


On Jan 06 10:14 AM whisperonthewind wrote:

> Until he was elected, no one had a clue what kind of CHANGE was intended
> because the illustrious one never said exactly what he was planning
> to do. Unfortunately, no one noticed that (or refused to notice).
> Now we are going to find out. Good or bad, we are on that road and
> going where no one knows what to expect. I agree that TNK will go
> up, because oil is going up. The others are not in my portfolio
> for a reason - I want dividends. I want to know ahead of time what
> to expect. So I don't have non-dividend stocks and I didn't vote
> for the illustrious one.

Jan 06 10:32 AM

[joes:]

The focus on presidential actions are a waste of time, look at the economy and the society and you will have a better chance of knowing what will be made and sold over the next few years.

Even tax policies are more an individual concern that macro drivers of wealth.

Jan 06 11:34 AM

[auto44:]

Not in this case, His spending will determine where profits will be. We expect infrastructure, grid, and green


On Jan 06 11:34 AM joes wrote:

> The focus on presidential actions are a waste of time, look at the
> economy and the society and you will have a better chance of knowing
> what will be made and sold over the next few years.
>
> Even tax policies are more an individual concern that macro drivers
> of wealth.

Jan 06 08:12 PM

[Storm Cat:]

"The so-called forward curve of futures contracts suggest that oil prices will rise 28% to $60.00 per barrel by December"

This is an irresponsible comment. Anyone who has traded crude knows when the term structure is in steep contango it forecasts a decline in prices .... it doesn't speak to a recovery ... ridiculous ...

Jan 08 01:54 PM

[Teknik Ranger:]

Yes, oil may decline slightly...but in the long run it will win out. This so-called "green" and "alternative" phase has a much higher price tag than that of oil...even when it was at $147 per barrel! What most people don't realize is that the production couldn't keep up with demand. The world was consuming 85 million barrels a day!

Now with the economic downturn people aren't using as much...so yes there is a surplus...but when demand comes back (which is inevitable) all of the OPEC cuts will drive prices through the roof. For an interesting read check out Matt Simmons on Peak Oil.

Feb 17 01:50 PM

[Conan the B...:]

TNK is structured to pay out almost 100% of its income Not the majority. It was done this way for the Benefit of its majority owner TK which ships about 10% of the world's oil.

Regardless of the Price of oil, TNK will provide income after expenses.

I bought it knowing full well that the dividend might be cut to 35 cents qtrly which would be around 14% on a $10 stock.

Last time around the market did not react quickly enough to a $1.07 dividend, I hope to pick it up below $10 again.

Barron's had an article on it a few months ago, they felt that the dividend would be $2 annually.

9 aframaxes, 2 suezmaxes with 2 more suez expected by middle of year.

On the two Suez size, I wouldn't worry about financing. Both are coming from the parent, which recently Increased its dividend again.

Feb 19 01:53 PM

[Buy and Hol...:]

You can always do a dividend trade with TNK. The ex-date is Wednesday, so buy it on Tuesday. Sell it on Wednesday if the dividend is greater than the amount the stock declines, or hold it until the price goes back up.

TNK is also trading above its 10 and 100 day SMA and close to its 50

Mar 01 09:28 AM