Oil is lower this morning as the World Bank is saying that Asia, and especially China, shall see lower growth heading forward. Oil is now lower than we envisioned it going, with growth fears and a lack of a flare up in the Middle East helping push both physical oil and oil shares lower. Markets act like this, which is why any time we see talk of tapping the Strategic Petroleum Reserve, or 'SPR', we think how ridiculous the notion is. We do not buy the unemployment numbers from last week, but we do think that the economy is going to get better moving forward. So we continue to be buyers of the oil names we have been bullish of recently.
Oil & Natural Gas
This morning we want to direct the attention of both our readers and traders to Rosetta Resources (ROSE) which has seen shares retreat recently to the $45/share level. The shares are getting quite close to our buy range and reaching oversold territory in our opinion. The company is a screaming buy in the $40-42/share area and offers a nice entry point for both short-term and long-term traders. For traders we would look to exit positions at the $48-50/share level. The Eagle Ford has provided the positive results to push this one higher, and will continue to do so. This stock has a kicker should dry natural gas prices continue to rise as they have some very promising acreage in the Eagle Ford in the dry gas window.
ExxonMobil (XOM) hit a new 52-week high on Friday as shares closed at $92.55/share after rising $0.33 (0.36%) during the trading session. The company will benefit from high natural gas prices and the improved operating margins across the board for refiners. Speaking of the refining business, the company's Torrance refinery resumed normal operations on Friday which many are hoping will help push the record gasoline prices in California down in the next few weeks.
Ur-Energy (URG) finally obtained the last regulatory approval they needed to move forward with their Lost Creek project. Shares rose $0.06 (6.32%) to close at $1.01/share on volume which was about twice as high as normal on the news. The project is fully permitted, so after winter the company can then get on with building the necessary infrastructure to get up and running. It has been a long road to this point, taking longer than anyone, including the company, thought that it would but the pieces to this puzzle may finally be starting to fall in place just as a renaissance in the price of uranium may be taking place. For readers unfamiliar with our thinking, we believe that next year will see price gains for physical uranium as Russia pulls their above ground stockpiles from world markets at absurdly low prices.
We said to sell Denison Mines (DNN) on the heels of the previous rally that took shares into the $1.70/share area and we noticed Friday that shares are now back to the levels where shares traded prior to the run-up. We would recommend pocketing the gains and redeploying the original capital. Knowing when one of your stocks has gotten ahead of itself and taking profits is important, and giving yourself the opportunity to get back into your position at levels before that run-up allows you to reestablish the position while having taken some 'winnings' off of the table. This is always a good strategy but requires a good bit of knowledge and familiarity with your portfolio's holdings.
One name we always encourage investors to sell into the rallies is First Solar (FSLR). We would prefer that investors simply not own shares in the company at all, however for those who find themselves lucky to have made money in the company we always say sell. We said that not long ago as shares rallied higher and on Friday shares fell $2.48 (11.00%) to close at $20.07/share on volume of 15 million shares. The company has a manufacturing issue which has caused an issue with some of their installations - rooftop mainly. According to the company, these repairs will not have an impact upon the company's earnings, however from a reputation standpoint one has to believe that it will take a toll.
Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.